Enterprise Products Partners L.P. (EPD) — I last covered EPD stock in the Trade of the Day on Nov. 19. It had just triggered a strong buy signal as it reversed from a downtrend line at about $25 on higher-than-average volume. I recommended traders buy shares of the master limited partnership (MLP) under $25 with a target of $30.
What followed was a bumpy ride to be sure, as EPD stock bounced around before rebounding from its early 2016 lows along with the price of oil price. Traders who followed my advice are currently sitting on a gain of about 10%.
There have been a number of positive developments since my last review. For starters, oil prices have nearly doubled since their mid-February lows. And Bernstein initiated coverage on EPD stock with an “Outperform” rating and $33 price target.
From a technical perspective, EPD stock triggered two more buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR). It also double-bottomed from a saucer formation and established an uptrend line. This line is supported by the 50-day moving average, now at $25.50.
In mid-April, shares managed to climb back above their 200-day moving average for the first time in almost a year. And last week, the 50-day moving average crossed up through the 200-day moving average, triggering a golden cross, which is a long-term buy signal. Long-term support is provided by a recent buy signal from the MACD indicator.
If EPD stock is able to break through the resistance line at $27.50, it could make a run for its May 2015 highs near $34. If successful, new buyers stand to see a gain of 24%. And those who bought in November could book a profit of more than 35%, plus dividends.
Enterprise Products Partners pays a quarterly distribution of 39.5 cents per share for a current forward annual yield of 5.7%.
