Enbridge Energy Partners, L.P. (EEP) — On Nov. 20, with shares of this master limited partnership (MLP) at $38.56, I reiterated my “buy” rating and raised my trading target by $2 to $44. EEP stock is now up 6.4% since my initial recommendation on Oct. 29. With an annual dividend of $2.22 per share, it currently yields 5.6%.
When the company reported third-quarter earnings in early November, EBITDA of $407 million exceeded Credit Suisse’s (CS) estimate by 2% and beat the Street’s consensus estimate by 6%. Following the announcement, Credit Suisse issued favorable comments, reiterating its “outperform” rating and $42 price target.
After consolidating between early 2011 and mid-2014, EEP stock broke up through its long-term resistance line at $32 in June. It formed a bull channel with a support line connected to its March low. The top of the channel is defined by the highs of June and September.
The October sell-off drove shares to their 200-day moving average at $32, which had been a long-term resistance line. When EEP stock hit this line, it flashed a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR). It then rallied to its 50-day moving average where it briefly hesitated before jumping to a new all-time high on very high volume.
In light of this high-volume action, I raise my price target for EEP stock by $3 to $45. Traders who purchased shares on my initial recommendation should enter a stop-loss at $38 to protect their initial investment and move it up as EEP stock rises to protect profits.
