Bernard Colson, Managing Director and Senior Analyst for MLPs at Oppenheimer & Co., says EQT Midstream Partners LP (EQM) is one of his top stock picks for 2015. He believes the company is positioned to continue strong growth.
“Number one, they have no commodity price exposure in a direct way. All of their contracts are fee-based contracts,” Colson says. “Number two, they’re leveraged in kind of a manageable way. I mean, every MLP is going to have some debt. You’re not going to have any MLPs that don’t have any debt, but they have a manageable level of debt.”
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In addition, Colson says EQT has a significant cash flow cushion and a strong, supportive parent company, both of which make the stock a defensive investment. And, Colson says EQT is exposed to the Marcellus Shale, which is a natural gas-focused shale. Since natural gas prices have not come down nearly as much as oil prices, Colson believes we will see continued development in the Marcellus.
“There are a lot of reasons to like [EQT Midstream Partners]; I anticipate that it’s going to grow in the kind of mid-20s on a percent basis,” Colson says. “Now, it’s a lower yield. It’s right now, I’m looking at a 2.7% yield, but it’s company that is set up to continue its strong growth.”
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