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Here's Why MPLX is an Attractive Investment Bet Right Now

MPLX LP MPLX witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days.

The company, with a Zacks Rank #2 (Buy), has gained 8.2% in the past year compared with a 6.4% improvement of the composite stocks in the industry.


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Factors Favoring the Stock

Being a leading midstream energy player, MPLX is least exposed to commodity price fluctuations. This is because shippers contract the midstream assets for the long term. Thus, their business model is relatively low-risk, indicating less exposure to oil and gas price and volume risks.

The partnership’s assets involve a network of pipelines that carry crude oil and refined products. It also generates cashflows from fuel distribution operations. In the prolific supply basins in the United States, MPLX has natural gas and natural gas liquids processing and fractionation facilities. Apart from gauging low-carbon opportunities, MPLX is banking on several organic growth projects.

Strong and stable operations back the partnership to persistently grow its distributable cash flow (DCF). In 2021, the partnership generated $4.8 billion in DCF, higher than the year-ago level of $4.3 billion. MPLX generated a free cash flow of $1,349 million for the second quarter, which increased from $1,210 million in second-quarter 2021.

The partnership has a strong focus on returning capital to shareholders. In the second quarter, it paid out more than $750 million of capital to unitholders through distributions and unit repurchases. Also, MPLX’s board of directors authorized a unit repurchase program of up to $1 billion of the outstanding publicly traded common units.

Thus, MPLX stock appears to be a solid bet, based on the strong fundamentals and compelling business prospects.

Stocks to Consider

Some better-ranked players in the energy space are RPC Inc. RESLiberty Energy LBRT and Marathon Petroleum Corporation MPC. All the stocks sport a Rank #1 (Strong Buy). You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICID=zp... _1link">the complete list of today’s Zacks #1 Rank stocks here.

RPC is among the leading providers of advanced oilfield services and equipment to almost all prospective oil and gas shale plays in the United States. With no debt load, RPC had cash and cash equivalents of $78.2 million at the second quarter-end. This reflects the company’s strong balance sheet position, which provides it with massive financial flexibility.

RPC has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. The company has a Zacks Style Score of A for Growth and Momentum. RES is expected to see earnings growth of 1,733.3% in 2022.

Liberty Energy offers hydraulic fracturing services to onshore upstream energy companies across multiple basins in North America. LBRT’s debt-to-capitalization stands at just 16% compared with many of its peers, which are hugely burdened with debts, accounting for around 50% of their total capital structure.

Liberty Energy has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. The company currently has a Zacks Style Score of A for Growth and B for Value and Momentum. LBRT is expected to see an earnings surge of 266.7% in 2022.

Marathon Petroleum is a leading independent refiner, transporter and marketer of petroleum products. MPC repurchased shares worth $4.1 billion in the May-July period of 2022 and completed more than 80% of its target of buying back common stock worth $15 billion.

Marathon Petroleum has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. The company has a Zacks Style Score of A for Value, Growth and Momentum. MPC is expected to see earnings growth of 788% in 2022.


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Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
 
MPLX LP (MPLX): Free Stock Analysis Report
 
RPC, Inc. (RES): Free Stock Analysis Report
 
Liberty Energy Inc. (LBRT): Free Stock Analysis Report
 
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