Three Credit Suisse MLP Picks
The S&P 500 outperformed master limited partnerships (MLPs) in 2012 for the first time since 1999. But MLPs came roaring back in January, following the end of wrangling over the fiscal cliff.
Among their top picks in this arena are Enbridge Energy Partners (NYSE: EEP), Genesis Energy (NYSE: GEL) and Kinder Morgan Energy Partners (NYSE: KMP), which all have yield equivalents of more than 4.5 percent.
Here is a quick look at how these three stocks have fared and what analysts in general expect from them.
Enbridge Energy Partners
This Houston-based owner and operator of crude oil and liquid petroleum transportation and storage assets has a market cap near $9 billion and a dividend yield equivalent of about 7.3 percent.
Its price-to-earnings (P/E) ratio is less than the industry average, and the long-term earnings per share (EPS) growth forecast is more than 20 percent. The return on equity is about 14 percent, and the operating margin is in line with the industry average.
The shares sold short at the mid-January settlement date represent less than two percent the float. However, that is the second highest level of short interest in the past year.
Of the 16 analysts who follow the stock and were polled by Thomson/First Call, seven of them recommend buying shares and only one rates the stock at Underperform. The analysts' mean price target, or where they expect the share price to go, is more than seven percent higher than the current share price. But that price target is less than the 52-week high.
The share price rose more than three percent in January but has pulled back a bit in the past week. The stock's performance has been in line with larger competitor ONEOK Partners (NYSE: OKS) over the past six months, but it has underperformed the broader markets.
This is a midstream energy MLP also headquartered in Houston. It sports a market cap of more than $3 billion and offers a dividend yield equivalent of about 4.8 percent. The P/E ratio is higher than the industry average, and the long-term EPS growth forecast is more than 31 percent.
The operating margin is less than the industry average, and the return on equity is less than nine percent. The short interest is less than one percent of the float.
Ten out of the 12 analysts surveyed recommend buying the stock, and the other two recommend holding shares. But the current share price has overrun their mean price target. And the highest individual price target represents less than five percent potential upside.
Genesis Energy shares are trading almost 11 percent higher year to date, as well as more than 40 percent higher than a year ago. Over the past six months, the stock has outperformed Enterprise Products Partners (NYSE: EPD) and Plains All American Pipeline (NYSE: PAA), which were also Credit Suisse MLP picks.
Kinder Morgan Energy Partners
This Houston-based pipeline transportation and energy storage company has a market cap of more than $32 billion and a dividend yield equivalent of about 5.8 percent. Its operating margin is higher than the industry average, but the return on equity is less than seven percent. The long-term EPS growth forecast is more than 11 percent, while the P/E ratio is higher than the industry average.
Note that the short interest was less than two percent of the float at the mid-January settlement date, but that was the highest number of shares sold short since November.
The consensus recommendation of the analysts surveyed is to hold shares, and it has been for at least three months. But none of them rates shares at Underperform. The mean price target is barely higher than the current share price, meaning analysts in general feel this stock has little room to run.
The share price rose more than six percent in January and is once more approaching the 52-week high from nearly a year ago. Over the past six months, the stock has underperformed Genesis Energy, but outperformed Enbridge Energy Partners and the broader markets.
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