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These MLPs Might Be The Best 'Lower For Longer' Oil Plays

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These MLPs Might Be The Best 'Lower For Longer' Oil Plays
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Simmons & Company has initiated coverage in the Master Limited Partnership (MLP) space and named its top MLP plays. According to analyst Brian Gamble, the huge investor outflow from MLPs in the past couple of years has created a handful of major value opportunities in the space.

“While the near-term cash flow generation capabilities of most traditionally-structured MLPs remain intact, the clarity of future operational growth and the associated cash distributions that have underpinned investor enthusiasm for the sector have been impaired over the past 12 months, leading to an investor exodus,” Gamble explains.

Related Link: Macquarie: Oil Will Fall To Low $30s Again

So far in 2016, investor anxiety remains elevated and MLP management has repeatedly assured the world that their cash flows are stable and that there is limited counterparty risk in the space.

Gamble is not convinced that all MLP’s are as financially solid as they claim to be, and Simmons prefers names that can fully cover their current distribution payments and have financed growth projects in 2016 and EBITDA outlook clarity.

Simmons names Enterprise Products Partners L.P. (NYSE: EPD) and Holly Energy Partners, L.P. (NYSE: HEP) as its top core MLP buy ideas. In addition, the firm names EnLink Midstream Partners LP (NYSE: ENLK) as a higher risk/higher reward play for more aggressive investors.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for EPD

DateFirmActionFromTo
Nov 2016Ladenburg ThalmannInitiates Coverage OnBuy
Oct 2016Deutsche BankMaintainsBuy
Sep 2016MizuhoInitiates Coverage onBuy

View More Analyst Ratings for EPD
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