The Math Shows MLPJ Can Go To $9

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the Junior MLP ETF ( MLPJ), we found that the implied analyst target price for the ETF based upon its underlying holdings is $8.83 per unit.

START SLIDESHOW:
10 ETFs With Most Upside To Analyst Targets »

With MLPJ trading at a recent price near $8.06 per unit, that means that analysts see 9.53% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of MLPJ's underlying holdings with notable upside to their analyst target prices are Calumet Specialty Product Partners LP ( CLMT), Dominion Midstream Partners LP ( DM), and Valero Energy Partners LP ( VLP). Although CLMT has traded at a recent price of $3.50/share, the average analyst target is 66.06% higher at $5.81/share. Similarly, DM has 38.77% upside from the recent share price of $23.60 if the average analyst target price of $32.75/share is reached, and analysts on average are expecting VLP to reach a target price of $53.82/share, which is 32.13% above the recent price of $40.73. Below is a twelve month price history chart comparing the stock performance of CLMT, DM, and VLP:

CLMT, DM, and VLP Relative Performance Chart

Combined, CLMT, DM, and VLP represent 6.34% of the Junior MLP ETF. Below is a summary table of the current analyst target prices discussed above:

Name Symbol Recent Price Avg. Analyst 12-Mo. Target % Upside to Target
Junior MLP ETF MLPJ $8.06 $8.83 9.53%
Calumet Specialty Product Partners LP CLMT $3.50 $5.81 66.06%
Dominion Midstream Partners LP DM $23.60 $32.75 38.77%
Valero Energy Partners LP VLP $40.73 $53.82 32.13%

Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.

The average analyst target price data upon which this article was based, is courtesy of data provided by Zacks Investment Research via Quandl.com.
Get the latest Zacks research report on CLMT — FREE
Get the latest Zacks research report on DM — FREE
Get the latest Zacks research report on VLP — FREE

If you liked this article you might like

Facebook Is 'Liked' by Analysts; Shares Could Reach $100

Facebook Is 'Liked' by Analysts; Shares Could Reach $100

Junior MLP ETF -- Insider Buying Index Registering 32.2%

Junior MLP ETF -- Insider Buying Index Registering 32.2%

Shares Of MLPJ Now Oversold

Shares Of MLPJ Now Oversold

New Small-Cap MLP Fund Offers Potential for Yield, Growth

New Small-Cap MLP Fund Offers Potential for Yield, Growth