Despite an impressive rally in the market Friday, I am still cautious on the outlook for equities for the rest of the year. As part of the caution, I maintain a good portion of my portfolio in high income producing vehicles. I particularly like the energy MLP space and Linn Energy (LINE) is my favorite pick in the sector and one I have written about many times. A fairly new MLP has also caught my eye for its impressive growth trajectory and recent insider buying. It is Mid-Con Energy Partners (MCEP).
"Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America. Its principal areas of operation are located in southern Oklahoma, northeastern Oklahoma, and parts of Oklahoma and Colorado within the Hugoton basin in the Mid-Continent region of the United States." (Business description from Yahoo Finance)
Six reasons for income investors to pick up MCEP at $20 a share:
- MCEP provides investors a robust yield of 9.3%.
- The stock has limited coverage as it has been a public company for less than a year. However, the four analysts that cover the stock have a median price target of $24 on MCEP and MLV & Co. just initiated MCEP as a "Buy" in May. Oppenheimer also has it as a top pick in the MLP sector.
- A director purchased 20,000 new shares in the second quarter.
- EPS growth is encouraging. The company made 86 cent a share in FY2011, but analysts currently have it making $1.68 in FY2012 and $1.93 in FY2013.
- First quarter production was up 85% Y/Y and almost all of Mid-Con's reserves and production is oil, avoiding the impacts of low natural gas prices. In addition, the majority of its production is hedged through 2013 currently.
- The stock has now bounced three times off technical support at slightly lower levels (See Chart).