With the stock market due for a 10 percent to 15 percent pullback after its extended rally (the topic of my recent appearance on CNBC), we’ve opted to book gains on some of the names in our Focus List.
One of our biggest winners, Western Gas Partners LP (NYSE: WES) has generated a total return of 24 percent since we added the stock to our Focus List on Nov. 14, 2012. Although we remain bullish on the midstream operator’s visible pipeline of drop-down transactions and regard the stock as an excellent long-term holding, the Focus List concentrates on the best opportunities in the current market. Trading above our buy target, units of Western Gas Partners no longer meet this criterion.
Accordingly, we are dropping Western Gas Partners from our Focus List, though we will continue to cover the stock in our MLP Ratings table. Investors should consider booking their almost 20 percent gain and maintaining their original position in the stock. With the debate over automatic cuts to US government spending likely to intensify in coming weeks, the future may bring an opportunity for investors to add to their positions in Western Gas Partners, which rates a buy up to $52 per unit.
Investors in Oasis Petroleum (NYSE: OAS) should likewise consider taking their 23 percent profit off the table while maintaining their original investment. With the company enjoying improved price realizations on its output and production poised to grow significantly in 2013, the exploration and production company remains our favorite operator in the Bakken–and a potential takeover candidate. In light of this outlook, we are upgrading Oasis Petroleum to a buy up to $39 per share and will continue to track the stock in our Focus List.
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Elliott and Roger on Oct. 29, 2018
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