Investing

5 Top-Rated Energy Mid-Cap Stocks to Ease Inflation Pain

Thinkstock

With energy prices continuing to rise (if not soar), it is not only boosted the giant energy firms like Chevron and Exxon Mobil. In fact, one of the companies we take a look at here has seen a bigger one-year share price increase than either of those giants, though its market cap is below $5 billion and its per-share price is a third of Exxon’s and less than a fifth of Chevron’s.

All but one of the five companies in our list are organized as a master limited partnership (MLP), wherein investors purchase the partnership’s common units instead of common stock. The MLP does not pay tax on its income, as that is left to the investor-partners. That’s one reason the distributions from these companies are so high.

Another reason these energy mid-caps (market cap between $2 billion and $10 billion) have been having such a banner year is that, no matter what business they are in, that business all boils down to energy. For the year to date, energy sector stocks are trading up by nearly 46%. No other market sector is trading in the green for the same period.

The mid-cap stocks on our list all have at least an average Buy rating from the analysts covering the stock.

Crestwood Energy Partners

Houston-based Crestwood Energy Partners L.P. (NYSE: CEQP) owns and operates assets and operations in the energy midstream industry. These assets are spread among some of the biggest shale plays in the Lower 48, including the Williston and Powder River basins, the Delaware (Permian) and Barnett shale basins in Texas, and the Marcellus shale of Ohio and the northeastern United States.

The company’s market cap is $2.86 billion, and it attracts little attention from analysts. Of just eight brokerages covering the firm, though seven have a Buy or Strong Buy rating on the common units. Based on a median price target of $36.00, the upside potential on the shares is 23.3%.


Crestwood raised its distribution by $0.05 per common unit for the first quarter to $0.655. The forward yield on the units is 9.07%. The company’s payout ratio is negative for the past 12 months, because it has posted a net loss of $18.1 million over that time. On a pretax basis, excluding one-time items, Crestwood reported earnings of $87.3 million for the previous four quarters.

The 52-week trading range is $23.57 to $33.94 a share, and Crestwood’s one-year total return is 5.72%.

Viper Energy Partners

Midland, Texas-based Viper Energy Partners L.P. (NASDAQ: VNOM) owns, acquires and exploits oil and natural gas properties in the Permian Basin and Eagle Ford play in Texas. The company was formed by oil and gas producer Diamondback Energy to focus on owning and acquiring mineral and royalty interests in oil-weighted basins. Viper Energy’s assets consist of mineral interests and royalty acreage in the Permian and Eagle Shale.

The company’s market cap is $4.89 billion, and 17 brokerages offer coverage of the partnership’s common units. Of those, 15 have a Buy or Strong Buy rating. Based on a median price target of $36.00, the implied upside is about 23.3%. (These price numbers are coincidentally identical with Crestwood’s, in case you were wondering.)

Viper Energy raised its quarterly distribution by 43% to $0.67 per common unit in the first quarter. The forward yield on the shares is 9.38%, and the company’s payout ratio is 133.93%. The 52-week trading range is $15.98 to $32.35, and Viper’s one-year total return is 75.78%.

Viper’s one-year share price increase was nearly 75%, better than Chevron’s 66.6% increase or Exxon’s 61.3% increase.

Plains All American

Houston-based Plains All American Pipeline L.P. (NYSE: PAA) owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and natural gas liquids (NGLs) producing basins (including the Permian Basin) and transportation corridors and at major market hubs in the United States and Canada. Like most midstream MLPs, this one boasts a rather large amount of debt: $9.1 billion in net debt at the end of the March quarter. That is about $1 billion lower than the year-ago total.

This is the largest company in this group, measured by its market cap of $7.58 billion. Its size has attracted coverage from 21 brokerages. Of those, 16 have a Buy or Strong Buy rating on the common units and four have Hold ratings. The upside potential on the stock is nearly 30%, based on a median price target of $14.00.

The company raised its dividend by 15% for the first quarter, and its forward yield is 8.18%. Its payout ratio of 198.88% is tops in this group. The 52-week trading range is $8.64 to $12.38, and the total one-year return is 11.3%.

Black Stone Minerals

Houston-based Black Stone Minerals L.P. (NYSE: BSM) owns and manages royalty interests in oil and natural gas production across 41 states. As is the case with other companies that rely on royalty payments for revenue, when the price goes up so do distributions to limited partners.

Black Stone’s market cap is $3.1 billion, and just six brokerages cover the stock. Half have a Buy rating on the common units and the other half have Hold ratings. Based on a median price target of $18.00, the upside potential is around 21.5%.

The company raised its distribution for the first quarter to $0.40 per common unit, a jump of 48% from the prior quarter. Black Stone’s forward yield is 11.95%, and the payout ratio is 137.35%. The 52-week trading range is $9.47 to $16.35, and the total one-year shareholder return is 63.23%. Blackstone’s share price gain for the past 12 months was 63.8%.

Antero Midstream

Denver-based Antero Midstream Corp. (NYSE: AM) owns and operates a natural gas network that collects and processes gas from wells in the Marcellus and Utica shale plays located in Ohio and West Virginia that are operated by Antero Resources. In a joint venture with MPLX, the two firms have a 40,000-barrel per day natural gas liquids (NGL) fractionation capacity with a daily processing capacity of 1.6 billion cubic feet per day.


Antero Midstream has a market cap of $4.82 billion and, unlike the other companies on this list, is organized as a C-corporation. Only nine brokerages cover the company, and four of those have Hold ratings, while just one rates the stock at Buy. This is the weakest rating among the five stocks on our list, likely because its upside potential is just 5%, based on its median price target of $10.50.

The company pays an annual dividend of $0.90, for a yield of 8.96%, and its payout ratio is a lusty 131.8%. The stock’s 52-week range is $8.42 to $11.71. The total one-year shareholder return is 9.63%.

Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE

Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply
clicking here
you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.


Click here
to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.