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Buy select MLPs and oil stocks on weakness, Baird analyst says

  • Investors should use the current weakness as an opportunity to buy select MLPs and other energy stocks, Baird analyst Ethan Bellamy believes, as he remains “long-term bullish” on oil prices since he thinks near-term oversupply will be supplanted by undersupply.
  • Among MLPs, Bellamy prefers Plains All American Pipeline (PAA, PAGP) and Energy Transfer (ETE, ETP) given large liquids upside exposure.
  • In E&Ps, he likes SM Energy (NYSE:SM), WPX Energy (NYSE:WPX), Pioneer Natural Resources (NYSE:PXD) and Larado Petroleum (NYSE:LPI), which all hold positions in the low-cost Permian.
  • For traders with a short-term horizon, Bellamy "would hide in natural gas," particularly Antero Resources (NYSE:AR) and Antero Midstream Partners (NYSE:AM).
  • He hedges his bets, however: "If the Saudis once again abrogate their cartel role, electing to forego the Aramco IPO until 2019, oil could remain under pressure into 2018 given still-bloated inventories."

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Plains All American Pipeline, L.P. Common Units