Sunoco Logistics Partners LP (SXL) — Sunoco, Inc. created this master-limited partnership (MLP) to acquire and operate pipelines and storage facilities for crude oil and refined products. Sunoco Logistics Partners’ stable, fee-based operation offers a solid financial structure.
Capital IQ estimates capital spending will rise to $2.7 billion in 2015, up from $2.5 billion in 2014, before falling significantly to $1.5 billion in 2016 and $1 billion in 2017.
Its analysts expect earnings per unit of $1.26 in 2015, up from $0.51 in 2014, and they forecast earnings of $1.96 in 2016. Their 12-month price target for SXL stock is $44.
Capital IQ estimates cash distributions of $1.79 in 2015, an increase from $1.49 in 2014, and $2.06 in 2016. Currently, shares provide a yield of 5.3%.
SXL stock, along with most other energy stocks, is in a downtrend. However, its higher-than-average yield and the nature of the company’s operations could serve to stabilize this downtrend.
SXL stock is trading at the bottom of a channel down with support at $32 and first resistance at its 50-day moving average at $35.99. Although volume is light, buyers have recently emerged below $33.
The buy under price is $33 and my trading target is $40 within four months, which would result in a gain of more than 20%, plus dividends. Long-term investors should consider holding SXL stock with a 12-month target of $44. This could produce a total return of more than of 38% (33% in capital gains plus a 5.3% dividend yield).
