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MarkWest Energy Partners LP (MWE)
Limited Partnerships have
been all the rage in the past year or so. The key is knowing
you are investing in, as not all MLPs are gold. MarkWest
Energy is in the
business of gathering, processing and transporting natural gas as well
transportation, fractionation, storage and marketing of NGLs (natural
liquids). They also gather and transport crude oil.
gas prices are at all time
lows, while crude remains elevated in price. There is no
doubt that our
country is working to become both self reliant and smarter when it
comes to our
energy needs. But people like T. Boone Pickens and many
pushing for us to exploit our huge natural gas resources, which will
MWE and many MLPs.
Company Description &
MarkWest in an MLP formed in 2002 and is a leading provider of
(pipeline) natural gas and energy services. The MLP structure
investors liquidity and certain tax advantages.
have a strong presence in the
Marcellus Shale, Huron/Berea Shale, Woodford Shale, Granite Wash, and
Haynesville Shale, which are all emerging resource plays that are
be a significant source of domestic natural gas production.
company recently announced
expansion plans for the Marcellus and Utica shales that include more
million cubic feet per day (MMcf/d) of additional processing capacity
140,000 barrels per day (Bbl/d) of incremental fractionation capacity.
complete, MarkWest will operate approximately 2.3 billion cubic feet
(Bcf/d) of processing capacity and nearly 300,000 Bbl/d of
capacity serving the Northeast shales, including the Huron, Marcellus,
is probably not a company
that you are familiar with, but they are a premier player in the space
continue to have upside if the price of natural gas rebounds and our
consumption of it and other energy resources increases. Both
of which are
MarkWest Energy is a mid-cap (5.52 billion) company that is trading at
times trailing earnings (P/E). Looking forward, Zacks
are calling for that number to drop closer to 21 with no change in
these levels 12 months from today. Keep in mind that MLPs
generally return profits in the form of quarterly dividends paid out to
jumped from a Zacks Rank 3
to Rank 1 back on the 10th of November. Since then it has
a rank of 1 and 2 until hitting number 1 again on the 10th of
pipeline company reported a
quarterly sales increase of 27% at their last earnings
report. It was a
strong Q3 report; annual sales leapt 99% compared to 2010. Total sales
1.18 billion in FY2010. MWE saw earnings growth of 700% in
the same year
over year period. MarkWest is expected to earn $2.26 in
to the Zacks Consensus Estimate.
We only saw two upward revisions in the past 90 days. The two
increased their estimates for the current quarter and FY2012.
will report Q4 (2012) results on February 29th.
are for MarkWest to
generate $0.52 in income this quarter. Of the 8 analysts who
the consensus is for the company to grow earnings by 246.92% in FY2011
roughly 28% in FY2012. The percentage gains look excessive because MWE
from a very small annual EPS number. In terms of the
magnitude of analyst
estimate trends, we are seeing mixed consensus estimates depending on
quarter. Natural gas pricing and discovery variables can
beat estimates last quarter
by 72% and has managed to exceed consensus estimates for the past year
average of about 48%. In the past 12 months, the stock has
after earnings releases.
Market Performance &
MWE’s chart looks like a stairway to heaven. Since its October lows the
has been moving steadily higher, making new 52 week highs since
has maintained its price above
the 50 and 200 day moving averages since mid-October and has not
either. The 50 day currently stands at $55.25 and the 200 at
$49.31. You can look to both those levels for
support. There is
also some consolidation around the $54 level that should be a “sticky”
for MWE if is pulls back from here, which I would expect.
is no doubt a momentum
stock and the trend remains bullish. It has also been a
banner year for
MWE being that it has exceeded the S&P 500 by over 33% over the
months. Watch for continued strength in this energy
Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
Whisper Trader Service.