Markwest Energy Partners LP (MWE): A Pipeline to Solid Returns

4). Meet Growing Energy Demand: The US Energy Information Administration projects global energy demand rising from 352.4 quadrillion Btu in 2011 to 416.0 quadrillion Btu in 2020, and the opportunity presented to meet this rising demand could fuel growth

Threats:

1). Government Regulation: Any government regulation that restricts the company’s ability to expand efficiently could pose a major threat to business; for instance, a major Keystone pipeline project was recently rejected

Competitors:

Major publicly traded competitors of Markwest include Oneok Partners LP (NYSE:OKS), Enbridge Inc (USA) (NYSE:ENB), Enterprise Products Partners L.P. (NYSE:EPD), and Kinder Morgan Energy Partners LP (NYSE:KMP). Oneok is valued at $13.12 billion, pays out a dividend yielding 4.76%, and carries a price earnings ratio of 16.39. Enbridge is valued at $35.31 billion, pays out a dividend yielding 2.85%, and carries a price earnings ratio of 40.17. Enterprise Products Partners is valued at $51.06 billion, pays out a dividend yielding 4.67%, and carries a price earnings ratio of 20.85. Kinder Morgan is valued at $31.96 billion, pays out a dividend yielding 5.89%, and carries a price earnings ratio of 53.20.  

The Foolish Bottom Line:

Financially, Markwest is solid. The company possesses accelerated revenue growth, a rapidly expanding dividend, and a strong free cash flow position. The only major weaknesses of the company are its net debt and high valuation. Looking forward, Markwest is primed for steady growth as the company reinvests into its own business. All in all, Markwest is growing at an accelerated pace and is paying out a massive dividend, which is also growing. Bottom line, Markwest is a more aggressive investment than more diversified MLPs, and should trounce the overall market.

The article A Pipeline to Solid Returns originally appeared on Fool.com and is written by Ryan Guenette.

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