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7 Natural Gas Stocks to Watch

NEW YORK ( TheStreet) -- Based on strong industry outlook, latest quarterly results and analysts' buy, hold recommendations, these seven natural gas stocks have potential upsides ranging from 14% to 30%. On average, these stocks have buy recommendation of 55% and hold rating of 40%, based on a Bloomberg consensus.

The stocks are listed in ascending order of upside potential.

7. MarkWest Energy Partners (MWE), a Master Limited Partnership, engages in the gathering, processing and transportation of natural gas, transportation, fractionation, storage and marketing of NGLs, and the gathering and transportation of crude oil.

Of the nine analysts covering the stock, eight recommend a buy and one rates a hold. There are no sell ratings on the stock. Its average 12-month price target is $53.56, up 13.6% from the current price, as per a Bloomberg consensus.

The company reported revenue of $400.4 million for the second quarter of 2011 compared to $323.8 million in the same period prior year. Net income attributable to the partnership for the quarter stood at $78.5 million, or $1.03 per diluted share, compared to $60.2 million, or 84 cents per share, in the second quarter of 2010. At the end of the quarter, the company had cash and cash equivalents of $71.6 million, while capital expenditure stood at $101.6 million.

Cash available for distribution to common unit holders or distributable cash flow (DCF) for the second quarter stood at $82.9 million, indicating distribution coverage of 150%. Meanwhile, the second-quarter distribution of $55.4 million, or $0.70 per common unit, was paid to shareholders, indicating 4.5% sequential increase and $9.4 year-over-year increase.

The company has raised its full-year DCF forecast range to be $300 to $330 million from the previous view of $280 to $320 million, driven by forecasted operational volumes from existing operations, growth, and capital projects that likely will complete and commence operations during 2011.
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APL $0.00 0.00%
XTXI $0.00 0.00%
MWE $0.00 0.00%
DPM $32.67 0.00%
ETP $35.43 0.00%


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