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5 Reasons to Invest in Phillips 66 Partners (PSXP) Stock Now
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Phillips 66 Partners LP looks compelling at the moment. Given the partnership’s strong fundamentals as well as positive estimate revisions, it seems like this is the right time to add the stock to your portfolio.
Houston, TX-based Phillips 66 Partners, a growing master limited partnership, is a unit of Phillips 66 (PSX - Free Report) . Phillips 66 Partners has diversified midstream assets in crucial parts of North America. It has pipeline assets in Billings, Borger/Ponca City, Lake Charles, Sweeny and Wood River. Phillips 66 Partners’ natural gas liquids assets are located in Louisiana and Texas. Moreover, it has rail rack, storage and terminal properties in the states of Illinois, Kansas, Louisiana, Missouri, Montana, New Jersey, Oklahoma, Texas, Washington and Wyoming. Notably, it currently has a Zacks Rank #1 (Strong Buy), which means the partnership is poised to outperform the market.
What Makes the Stock a Solid Bet?
Earnings Prospects & Estimate Revisions
Phillips 66 Partners’ earnings have improved over the last few quarters. The trend is expected to continue in the near term as well. Its earnings for the full year and third-quarter 2018 are expected to surge 44% and 78.4% year over year to $3.73 and 91 cents, respectively. It is to be noted that the partnership surpassed the Zacks Consensus Estimate in the trailing two quarters. Hence, another rise in income could be around the corner.
Over the past 60 days, three analysts have upwardly revised its earnings estimates for the third quarter and full-year 2018, while only one has decreased the same.
Free Cash Flow
The partnership has an impressive cash flow generating capability from its operations. Notably, in the second quarter of 2018, the partnership generated $66 million in free cash flow (FCF). In the trailing 12 months, Phillips 66 Partners generated FCF of $314 million. This ability of the partnership enables it to increase distribution and support its future growth projects.
Surging Distribution
Phillips 66 Partners has been increasing its distribution every quarter since 2013, which was the year of formation of the partnership. This attribute of the partnership has made it quite desirable for the energy investors.
Growth Opportunities
Phillips 66 Partners has several projects in the pipeline, among which the Gray Oak Pipeline system is a significant one. The partnership is building the $2-billion Gray Oak Pipeline system, having an initial capacity of 800,000 barrels of oil per day. By the end of 2019, the pipeline will be ready to bring crude from the Permian Basin and Eagle Ford to Houston and Corpus Christi. The project, after coming online, is expected to reduce the ongoing takeaway constraint in the Permian Basin. Other projects of the partnership, which are currently under development, include South Texas Gateway terminal, Clemens Caverns expansion, Sand Hills pipeline expansion and Bayou Bridge pipeline extension.
Impressive Industry Outlook
The industry, to which Phillips 66 Partners belongs, currently has a Zacks Industry Rank of 65 out of 255 (top 25%). Studies have shown that 50% of a stock's price movement is directly tied to the performance of the industry group that it belongs to. In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking industry performance into account becomes a necessary measure.
Other Stocks to Consider
If you are interested in the oil and gas sector, you can also opt for other top-ranked stocks like Petroleo Brasileiro S.A. (PBR - Free Report) or Petrobras and Shell Midstream Partners, L.P. , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.
Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines, and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
5 Reasons to Invest in Phillips 66 Partners (PSXP) Stock Now
Phillips 66 Partners LP looks compelling at the moment. Given the partnership’s strong fundamentals as well as positive estimate revisions, it seems like this is the right time to add the stock to your portfolio.
Houston, TX-based Phillips 66 Partners, a growing master limited partnership, is a unit of Phillips 66 (PSX - Free Report) . Phillips 66 Partners has diversified midstream assets in crucial parts of North America. It has pipeline assets in Billings, Borger/Ponca City, Lake Charles, Sweeny and Wood River. Phillips 66 Partners’ natural gas liquids assets are located in Louisiana and Texas. Moreover, it has rail rack, storage and terminal properties in the states of Illinois, Kansas, Louisiana, Missouri, Montana, New Jersey, Oklahoma, Texas, Washington and Wyoming. Notably, it currently has a Zacks Rank #1 (Strong Buy), which means the partnership is poised to outperform the market.
What Makes the Stock a Solid Bet?
Earnings Prospects & Estimate Revisions
Phillips 66 Partners’ earnings have improved over the last few quarters. The trend is expected to continue in the near term as well. Its earnings for the full year and third-quarter 2018 are expected to surge 44% and 78.4% year over year to $3.73 and 91 cents, respectively. It is to be noted that the partnership surpassed the Zacks Consensus Estimate in the trailing two quarters. Hence, another rise in income could be around the corner.
Over the past 60 days, three analysts have upwardly revised its earnings estimates for the third quarter and full-year 2018, while only one has decreased the same.
Free Cash Flow
The partnership has an impressive cash flow generating capability from its operations. Notably, in the second quarter of 2018, the partnership generated $66 million in free cash flow (FCF). In the trailing 12 months, Phillips 66 Partners generated FCF of $314 million. This ability of the partnership enables it to increase distribution and support its future growth projects.
Surging Distribution
Phillips 66 Partners has been increasing its distribution every quarter since 2013, which was the year of formation of the partnership. This attribute of the partnership has made it quite desirable for the energy investors.
Growth Opportunities
Phillips 66 Partners has several projects in the pipeline, among which the Gray Oak Pipeline system is a significant one. The partnership is building the $2-billion Gray Oak Pipeline system, having an initial capacity of 800,000 barrels of oil per day. By the end of 2019, the pipeline will be ready to bring crude from the Permian Basin and Eagle Ford to Houston and Corpus Christi. The project, after coming online, is expected to reduce the ongoing takeaway constraint in the Permian Basin. Other projects of the partnership, which are currently under development, include South Texas Gateway terminal, Clemens Caverns expansion, Sand Hills pipeline expansion and Bayou Bridge pipeline extension.
Impressive Industry Outlook
The industry, to which Phillips 66 Partners belongs, currently has a Zacks Industry Rank of 65 out of 255 (top 25%). Studies have shown that 50% of a stock's price movement is directly tied to the performance of the industry group that it belongs to. In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking industry performance into account becomes a necessary measure.
Other Stocks to Consider
If you are interested in the oil and gas sector, you can also opt for other top-ranked stocks like Petroleo Brasileiro S.A. (PBR - Free Report) or Petrobras and Shell Midstream Partners, L.P. , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.
Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines, and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>