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Trade of the Day: Bull Run in MMP Stock Far From Over

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Magellan Midstream Partners, L.P. ( MMP ) - I recommended MMP stock as the Trade of the Day on Jan. 19 , telling traders to buy shares at $60 with a target of $75. That target was achieved Monday, meaning traders are sitting on a gain of 25% in five months. However, fundamental and technical conditions remain very positive.

This master limited partnership (MLP) transports, stores and distributes refined petroleum products through its 9,500-mile pipeline system. That is the longest refined petroleum products pipeline system in the United States with access to almost 50% of the nation's refining capacity.

Last month, S&P Capital IQ Equity Research lowered its full-year earnings estimate by 20 cents to $3.53 per unit but maintained its "Strong Buy" rating on MMP stock. It also upped its 12-month price target by $4 to $82, which is based on 17.5 times 2017 estimated operating cash flow.

At the time, Capital IQ analysts noted high inventories of gasoline and diesel fuel could hit Magellan's margins but that the MLP should benefit from higher volumes. Since then, supply problems in Canada and Venezuela reduced the oversupply, and the summer driving season has arrived just as supplies from Canada have resumed, all of which could benefit Magellan.

Turning to the chart, MMP stock broke from an ascending triangle at about $72, confirming that its bull market is intact. So, those who purchased shares in January should continue to hold with a new target of $85. If that target is hit, they stand to make a profit of more than 40%, plus cash distributions. Magellan declared a Q1 cash distribution of $0.8025 a unit, which was almost 12% above year-ago levels.

High accumulation and a MACD buy signal also support new positions in MMP stock. Those who don't yet own shares can buy them at $75 with a target of $85 for a potential return of more than 13%.

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The post Trade of the Day: Bull Run in MMP Stock Far From Over appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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