Persistent issues like aggressive interest rate hikes to curb the multi-decade high inflation and geopolitical uncertainties have kept the stock market under pressure. The market witnessed its worst first half in many decades, and strategists think there are still dark clouds on the horizon and there is some way to go before the storm blows over.
The S&P 500 ended the first half of 2022 with its largest decline since 1970 last week. However, the Energy Select Sector SPDR ETF (XLE) gained 30.8% year-to-date.
A master limited partnership (MLP) is a for-profit firm that is publicly traded as a limited partnership. Simply put, MLPs provide tax advantages similar to limited partnerships and liquidity similar to publicly listed securities. Also, they are considered low-risk investments as they offer a steady income stream in the form of consistent cash payouts.
So, amid the current scenario, it could be wise to scoop up the shares of fundamentally sound MLPs Blueknight Energy Partners, L.P. (BKEP), Martin Midstream Partners L.P. (MMLP), Western Midstream Partners, L.P. (WES) and Westlake Chemical Partners LP (WLKP), which are currently trading below $25. These stocks are rated Strong Buy or Buy in our proprietary POWR Ratings system.
Blueknight Energy Partners, L.P. (BKEP)
Headquartered in Tulsa, Oklahoma, BKEP provides integrated terminalling services for companies engaged in producing, distributing, and handling liquid asphalt in the United States. As of March 1, 2022, it had 54 terminals located in 26 states.
For the first quarter ending March 31, 2022, BKEP’s total revenue increased 5.2% year-over-year to $27.08 million. Its operating income came in at $7.21 million, while its net income grew significantly from its year-ago value to $81.65 million. The company’s EPS improved significantly from its prior-year quarter to $1.74.
Closing the last trading session at $4.52, the stock has gained 37% year-to-date and 47.7% over the past nine months.
BKEP's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Sentiment, Quality, and Value. Within the A-rated MLPs - Other industry, it is ranked #2 of 12 stocks.
To see additional POWR Ratings for Stability, Momentum, and Growth for BKEP, click here.
Martin Midstream Partners L.P. (MMLP)
MMLP is primarily involved in the terminalling, processing, storage, and packaging of petroleum products and by-products in the United States Gulf Coast region.
The company's Terminalling and Storage segment owns or operates 15 marine shore-based terminal facilities and 13 specialty terminal facilities that provide storage, refining, blending, packaging, and handling services for producers and suppliers of petroleum products and by-products.
In April, MMLP announced the expiration and results of its previously announced cash tender offer (Excess Cash Flow Offer) to purchase up to $9,305,000 aggregate principal amount (the Excess Cash Flow Offer Amount) of its outstanding 11.50% Senior Secured Second Lien Notes due 2025 (the Notes) at a purchase price of 100% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but not including, the purchase date.
During the first quarter ending March 31, 2022, MMLP’s revenue increased 39% year-over-year to $279.20 million. Its operating income grew 62.2% from its year-ago value to $25.45 million, while its net income improved 383.3% from its prior-year quarter to $11.48 million. The company’s EPS rose 383.3% year-over-year to $0.29.
The company’s shares have surged 51.1% year-to-date to close the last trading session at $4.02.
MMLP's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Momentum and a B for Growth and Value. Within the A-rated MLPs - Oil & Gas industry, it is ranked #1 of 34 stocks.
In total, we rate MMLP on eight different levels. Beyond what we've stated above, we have also given MMLP grades for Stability, Sentiment, and Quality. Get all the MMLP ratings here.
Western Midstream Partners, LP (WES)
WES, a midstream energy company headquartered in The Woodlands, Tex, acquires, owns, develops, and operates primarily in the United States. It participates in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing of produced water.
During the first quarter ending March 31, 2022, WES’ total revenues and others increased 12.3% year-over-year to $758.30 million. Its operating income grew 38.5% from its year-ago value to $404.82 million, while its net income improved 66.2% from its prior-year quarter to $308.72 million. The company’s EPS rose 70.5% year-over-year to $0.75.
The $0.76 consensus EPS estimate for the second quarter, ending June 2022, represents a 39.9% improvement year-over-year. Analysts expect its revenue to increase 11.2% year-over-year to $799.95 million for the same period.
Closing the last trading session at $24.52, the stock has gained 12.7% over the past year and 14.4% over the past nine months.
WES’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. WES has also rated an A grade for Quality and a B grade for Momentum and Sentiment. Within the A-rated MLPs – Oil & Gas industry, it is ranked #2 of 34 stocks.
In total, we rate WES on eight different levels. To see additional POWR Ratings for Growth, Stability, and Value for WES, click here.
Westlake Chemical Partners L.P. (WLKP)
WKLP acquires, develops, and operates ethylene production facilities and related assets in the United States. The company’s ethylene production facilities primarily convert ethane into ethylene. It also sells ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline, and hydrogen, directly to third parties on either a spot or contract basis.
During the first quarter ending March 31, 2022, WLKP’s total net sales increased 32.2% year-over-year to $290.66 million. The company’s income from operations grew 5.3% from its year-ago value to $83.21 million, while its net income attributable to WKLP increased 6.9% from its prior-year quarter to $16.91 million. The company’s EPS rose 7% year-over-year to $0.46.
Analysts expect WLKP’s revenue to increase 0.9% year-over-year to $325.11 million in the second quarter ending June 2022. The consensus EPS estimate of $0.48 for the third quarter ending September 2022 represents a 34.1% improvement year-over-year.
The stock has gained 1.7% over the past nine months to close the last trading session at $24.77.
It is no surprise that WLKP has an overall B rating, equating to Buy in our POWR Ratings system. WLKP has an A grade for Quality and a B for Stability and Value. In the A-rated MLPs – Other industry, it is ranked #6 of 12 stocks
Click here to see the additional POWR Ratings for WLKP (Sentiment, Momentum, Growth, and Quality).
BKEP shares were trading at $4.53 per share on Tuesday afternoon, up $0.01 (+0.22%). Year-to-date, BKEP has gained 40.21%, versus a -20.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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