In this article, we discuss the 11 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.
5. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 28
Enterprise Products Partners L.P. (NYSE:EPD) is an American midstream natural gas and crude oil pipeline company, which also operates as an MLP. The company maintained its distribution efficiently during the pandemic, compared with its peers.
Recently, BofA reinstated its coverage on Enterprise Products Partners L.P. (NYSE:EPD) with a ‘Buy’ rating and a $32 price target.
Of the 873 hedge funds tracked by Insider Monkey, 28 hedge funds have positions in Enterprise Products Partners L.P. (NYSE:EPD)in Q2 2021, up from 26 in the previous quarter. The total value of these stakes is $246 million.
ClearBridge Investments mentioned Enterprise Products Partners L.P. (NYSE:EPD) in its first-quarter 2021 investor letter. Here is what the firm has to say:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
4. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) is a publicly-traded MLP, engaged in natural gas and propane pipeline transport. It is one of the largest and diversified midstream service providers in the U.S.
In September, Citigroup raised its price target on Energy Transfer LP (NYSE:ET) to $15, while keeping a ‘Buy’ rating on the shares. In the same month, Tudor Pickering upgraded the stock to ‘Buy’ from ‘Hold’, with a $14 price target.
As of Q2 2021, 29 hedge funds tracked by Insider Monkey have stakes in Energy Transfer LP (NYSE:ET), compared with 25 in the previous quarter. These stakes are valued at $835.2 million.
Miller Value Partners mentioned Energy Transfer LP (NYSE:ET) in its second-quarter 2021 investor letter. Here is what the firm has to say:
“Energy Transfer LP (ET)rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Core of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash f low to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
3. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 38
Kinder Morgan, Inc. (NYSE:KMI) is one of the largest infrastructure companies in North America that owns oil and gas pipelines and terminals. Currently operating as a pipeline company, Kinder Morgan, Inc. (NYSE:KMI) brought all its units under one company by abandoning MLP.
On September 13, Kinder Morgan, Inc. (NYSE:KMI) announced its partnership with Finnish renewable fuels firm, Neste, for the development of a U.S. raw material storage and logistics hub to support the production of renewable diesel. In Q2 2021, Kinder Morgan, Inc. (NYSE:KMI) posted an EPS of $0.23, beating the estimates by $0.04. The company’s revenue for the quarter stood at $3.1 billion, presenting a 23% year-over-year growth.
As of Q2 2021, 38 hedge funds tracked by Insider Monkey have positions in Kinder Morgan, Inc. (NYSE:KMI), valued at over $1.03 billion. The number of hedge funds having stakes in the company was the same in the previous quarter. With 19.7 million shares worth $359.6 million, FPR Partners is the company’s leading shareholder.
2. The Williams Companies, Inc. (NYSE:WMB)
Number of Hedge Fund Holders: 39
The Williams Companies, Inc. (NYSE:WMB) is an American energy company involved in the processing and transportation of natural gas.
On September 22, The Williams Companies, Inc. (NYSE:WMB) signed an agreement with Danish renewables company Orsted to co-develop hydrogen or synthetic natural gas facilities powered by renewable energy. The joint agreement will consider large-scale wind energy. In Q2 2021, The Williams Companies, Inc. (NYSE:WMB) reported revenue of $2.28 billion, beating the estimates by $210 million and showcasing a 28.1% growth from the prior-year quarter. Recently, BofA reinstated the coverage of The Williams Companies, Inc. (NYSE:WMB) with a ‘Buy’ rating and a $31 price target.
As of Q2 2021, 39 hedge funds tracked by Insider Monkey have positions in The Williams Companies, Inc. (NYSE:WMB), up from 34 in the previous quarter. The total value of these stakes is $551 million.
Longleaf Partners Fund recently mentioned The Williams Companies, Inc. (NYSE:WMB) in its second-quarter 2021 investor letter. Here is what the firm has to say:
“Williams (14%, 0.51%), the natural gas pipeline operator, was also a positive contributor. The value grew slowly but steadily thanks to continued cash flow growth at Williams’s main Transco pipeline, as well as good volume trends (up 11% YOY) in its Northeast assets. The stock traded up with gas price strength as the quarter went on. We believe that management is open to more transactions to grow and simplify value per share, and as industry conditions improve, this becomes more likely.”
1. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 49
Cheniere Energy, Inc. (NYSE:LNG) is an American MLP, which owns one of the largest liquid natural gas (NLG) terminals in Louisiana, U.S., making it one of the best pipeline and MLP stocks to buy now.
In Q2 2021, Cheniere Energy, Inc. (NYSE:LNG) reported revenue of $3.02 billion, showcasing a 25.8% year-over-year growth. The company’s adjusted EBITDA for the quarter stood at $1 billion. For FY21, Cheniere Energy, Inc. (NYSE:LNG) raised its guidance of adjusted EBITDA between $4.6 billion to $4.9 billion due to improved market margins and growth in production. Recently, Evercore ISI lifted its price target on Cheniere Energy, Inc. (NYSE:LNG) to $130, while keeping an ‘Outperform’ rating on the shares.
As of Q2 2021, 49 hedge funds tracked by Insider Monkey have positions in Cheniere Energy, Inc. (NYSE:LNG), compared with 40 in the previous quarter. The total value of these stakes is over $2.94 billion.
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Disclosure. None. 11 Best Pipeline and MLP Stocks To Buy is originally published on Insider Money.
