Analysts Remain Very Bullish on MLPs (EVEP, MEMP, LGCY, BBEP, KYN, SRV, CS, BAC)
Mar 5th 2013 9:10AM
The MLP research team at Credit Suisse Group (NYSE: CS) are still firm believers in their "catch-up" rally slogan. Master limited partnerships (MLPs) underperformed the S&P 500 in 2012 for the first time since 1999, with the Alerian MLP Index (AMZX) gaining 4.8% versus 16.1% for the broader market. MLPs have made up ground thus far in 2013 and look to continue their solid progress. In a report issued today, Credit Suisse upgraded one MLP, and we also highlight other favorite MLP stocks to buy.
EV Energy Partners L.P. (NASDAQ: EVEP) gets the nod today as it is raised to Outperform from Neutral. The Credit Suisse team also raises their price target to $57.50 from $52.50. This is way below a very aggressive Wall St. consensus price target of $68. The current yearly distribution is $3.07 per year, for a 5.90% yield. MLP distributions often include return of principal.
The MLP analysts at Bank of America Corp. (NYSE: BAC) also have joined the growing chorus of those suggesting MLP stocks for their customers seeking solid, dependable income streams. In a recent research piece, the analysts pointed out that MLPs are attractive from an income and growth perspective, providing investors yield and return potential. They were positive on higher yielding MLP names. Here are three of them.
Memorial Production Partners L.P. (NASDAQ: MEMP) is a Houston-based MLP that has one of the highest distributions currently available. Paying $2.03 per unit, that translates to a 11.00% yield. The Thomson/First Call consensus price target is $21.50.
Based in west Texas, with properties in the Permian Basin, Mid Continent and the Rocky Mountain regions, Legacy Reserves L.P. (NASDAQ: LGCY) is another top Bank of America MLP pick. With a solid 8.60% distribution to unit holders, it has a consensus price target of $31.
Breitburn Energy Partners L.P. (NASDAQ: BBEP) another high yielding name, is a West Coast-based MLP that pays unit holders $1.88 per year, which equals a 9.80% yield. The consensus price target is $22.
As we have pointed out before, the advantage to owning MLPs in an investor portfolio is that they often present one of the best total return opportunities. These three high-yielding individual names could offer just that. Investors seeking diversification in the space may also want to look at the Kayne Anderson MLP Investment Co. (NYSE: KYN) or the more aggressive Cushing MLP Total Return Fund (NYSE: SRV). Both are exchange traded funds (ETFs) that offer a basket of MLPs.
Filed under: 24/7 Wall St. Wire, Analyst Calls, Oil & Gas Tagged: BAC, BBEP, CS, EVEP, KYN, LGCY, MEMP, SRV