In this article, we discuss the 11 best pipeline and MLP stocks to buy. You can skip our detailed analysis of the industry and go directly to read the 5 Best Pipeline and MLP Stocks to Buy.
MLPs mainly operate in the energy industry, especially in pipeline construction. In the initial months of the pandemic, the energy sector suffered a loss of 25%, according to a report by International Energy Agency. However, the robust vaccination process and the U.S. elections changed the dynamics of the sector, as the energy policy by the new U.S. government came into the spotlight.
According to a report by Research and Markets, the global oil and gas pipeline sector is expected to grow at a CAGR of 6%, reaching $262.1 billion by 2025. The report also mentions that the gas pipeline segment will dominate the market, with oil demand expected to grow by 1 million barrels per day (BPD) by 2025.
Our Methodology:
These are some of the most popular MLPs and pipeline stocks based on the data of over 873 hedge funds tracked by Insider Monkey as of Q2.
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Best Pipeline and MLP Stocks To Buy
11. Western Midstream Partners, LP (NYSE:WES)
Number of Hedge Fund Holders: 9
Western Midstream Partners, LP (NYSE:WES) is a Delaware-based MLP operating midstream energy assets.
In Q2 2021, Western Midstream Partners, LP (NYSE:WES) reported revenue of $719.1 million, showcasing a 7.1% year-over-year growth and beating the estimates by $61.15 million. The company’s free cash flow at the end of the quarter was recorded at $379.8 million. Recently, BofA reinstated the coverage of Western Midstream Partners, LP (NYSE:WES) with a ‘Buy’ rating and a $25 price target.
As of Q2 2021, 9 hedge funds tracked by Insider Monkey have positions in Western Midstream Partners, LP (NYSE:WES), up from 8 in the previous quarter. These stakes are valued at $162.7 million. With over 2.3 million shares, worth $51.2 million, Arrowstreet Capital is the company’s leading shareholder.
Miller/Howard Investments mentioned Western Midstream Partners, LP (NYSE:WES) in its first-quarter 2021 investor letter. Here is what the firm has to say:
“We increased our weight in Western Midstream Partners (WES) again this quarter, as it should benefit from higher oil prices that might lead to more drilling activity in the Permian and DJ basins.”
10. MPLX LP (NYSE:MPLX)
Number of Hedge Fund Holders: 11
MPLX LP (NYSE:MPLX) is a diversified master limited partnership (MLP) that operates midstream energy infrastructure. The company specializes in Logistics & Storage and Gathering & Processing.
Recently, BofA reinstated the coverage of MPLX LP (NYSE:MPLX) with a ‘Buy’ rating and a $36 price target. The firm’s analyst expects the offshore volume to recover throughout 2021 with stable and long-term free cash flows. In Q2 2021, MPLX LP (NYSE:MPLX) reported revenue of $2.4 billion, presenting a 15.4% year-over-year growth.
As of Q2 2021, 11 hedge funds tracked by Insider Monkey have positions in MPLX LP (NYSE:MPLX), compared with 8 in the previous quarter. These stakes are valued at $115.6 million.
Miller/Howard Investments mentioned MPLX LP (NYSE:MPLX) in its first-quarter 2021 investor letter. Here is what the firm has to say:
“Lastly, we added MPLX LP (MPLX) in the with-MLP version. MLPX pays a high dividend and is cheap relative to similar pipeline companies… We increased our weight in MPLX LP (MPLX) which provides exposure to Permian volumes and northeast natural gas volumes. In addition, the company’s FCF yield was above the portfolio’s FCF yield.”
9. Magellan Midstream Partners, L.P. (NYSE:MMP)
Number of Hegde Fund Holders: 26
Magellan Midstream Partners, L.P. (NYSE:MMP) is one of America’s largest MLPs that specializes in the transportation and distribution of refined petroleum products and crude oil. The company owns ammonia and pipelines in the Mid-Continent oil province.
Of the 873 hedge funds tracked by Insider Monkey, 13 hedge funds have positions in Midstream Partners, L.P. (NYSE:MMP) in Q2 2021, valued at $89.1 million. The number of hedge funds having stakes in the company stood at 14 in the previous quarter.
8. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 19
Enbridge Inc. (NYSE:ENB) is a pipeline and storage terminal company that transports crude oil and natural gas, specifically in North America. In 2018, the company announced a $10.5 billion buyout of its MLPs.
Recently, Enbridge Inc. (NYSE:ENB) has entered into a purchase agreement with EnCap Flatrock Midstream for the acquisition of Moda Midstream Operating, valued at $3 billion. The transaction is expected to close in Q4 of 2021. In Q2 2021, Enbridge Inc. (NYSE:ENB) posted an EPS of C$0.67, beating the estimates by C$0.11.
Recently, both Goldman Sachs and BMO Capital lifted their price targets on Enbridge Inc. (NYSE:ENB) to C$43 and C$57, respectively. Goldman Sachs’ analyst also raised his EBITDA estimates by 2% above consensus.
As of Q2 2021, 19 hedge funds tracked by Insider Monkey have positions in Enbridge Inc. (NYSE:ENB), compared with 22 in the previous quarter. The total value of these stakes is $166 million.
ClearBridge Investments mentioned Enbridge Inc. (NYSE:ENB) in its first-quarter 2021 investor letter. Here is what the firm has to say:
“Enbridge owns and operates one of the largest oil and gas pipeline networks in North America. The company also owns regulated gas distribution utilities in Ontario, Canada. The first quarter saw the market giving the energy sector credit for its leverage to the eventual economic recovery as COVID-19 vaccines get rolled out through 2021.”
7. ONEOK, Inc. (NYSE:OKE)
Number of Hedge Fund Holders: 26
ONEOK, Inc. (NYSE:OKE) is a midstream service provider and also owns premier natural gas liquids (NGL) systems. In 2017, the company merged with its MLP, Oneok Partners.
In September, Bernstein upgraded ONEOK, Inc. (NYSE:OKE) to ‘Outperform’, with a $66 price target, representing 20% upside. The firm believes that the company is well-positioned to benefit from the rising demand for gas and oil.
Of the 873 hedge funds tracked by Insider Monkey, 26 hedge funds have positions in ONEOK, Inc. (NYSE:OKE) in Q2 2021, up from 20 in the previous quarter. The total value of these stakes is over $178.7 million. Millennium Management is the company’s largest shareholder, with shares worth $35.5 million.
6. Equitrans Midstream Corporation (NYSE:ETRN)
Number of Hedge Fund Holders: 27
Equitrans Midstream Corporation (NYSE:ETRN) is a publicly-traded MLP that specializes in the gathering, transmission, and storage of natural gas.
In Q2 2021, Equitrans Midstream Corporation (NYSE:ETRN) posted revenue of $348.3 million, presenting a 2.3% growth from the prior-year quarter. The company attributed the growth in revenue to stable cash flow and higher volumes in gathering and transmission segments. Recently, BofA analyst Chase Mulvehill reinstated coverage of Equitrans Midstream Corporation (NYSE:ETRN) with a ‘Neutral’ rating and an $11 price target.
As of Q2 2021, 27 hedge funds tracked by Insider Monkey have positions in Equitrans Midstream Corporation (NYSE:ETRN), compared with 28 in the previous quarter. The total value of these stakes is $289.7 million. Zimmer Partners is the company’s largest shareholder with shares worth $110.2 million.
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Disclosure. None. 11 Best Pipeline and MLP Stocks To Buy is originally published on Insider Money.
