Trade of the Day: Target Raised on High-Yielding EEP Stock

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Enbridge Energy Partners, L.P. (EEP) — I last recommended this master limited partnership (MLP) on Oct. 29, at $37.45, with a trading target of $42.

The company missed Zacks’ consensus estimate for third-quarter revenue and profits when it reported in early November. Sales increased 9% year over year, and adjusted earnings per share (EPS) were up 178%.

Zacks maintains a “buy” on EEP stock, while Credit Suisse (CS) has an “outperform” rating and $42 price target.

Enbridge’s management is optimistic regarding the company’s long-term growth, saying they expect longer-term projects in 2015 with lower risk. EEP stock has a current yield of 5.7% based on its annual dividend of $2.22 per share.

After consolidating since early 2011 with resistance near $32, EEP stock broke out in June of this year, forming an intermediate trend channel. Shares ran to a high of $40.10 in September before the broad sell-off in energy stocks set in.

EEP stock took a 20% haircut, but the selling was stopped at its major support line (formerly resistance) at $32, where a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR), was triggered.

The intermediate trendline was reestablished, and on the second rally attempt from $32 support, EEP stock penetrated its 50-day moving average. The trading channel that began in July/August was resumed, and the CBR flashed another buy signal on Nov. 5, above $34.

MACD is bullish and volume supports a move higher. I reiterate my “buy” on EEP stock and increase my trading target by $2 to $44.

EEP Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2014/11/eep-stock-trade-day-enbridge-energy-partners-l-p/.

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