MLPJ's Underlying Holdings Imply 15% Gain Potential

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 $9.19 per unit.

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

With MLPJ trading at a recent price near $7.96 per unit, that means that analysts see 15.45% 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 Archrock Partners LP ( APLP), Rice Midstream Partners LP ( RMP), and Cheniere Energy Partners L P ( CQP). Although APLP has traded at a recent price of $15.48/share, the average analyst target is 40.50% higher at $21.75/share. Similarly, RMP has 27.34% upside from the recent share price of $21.36 if the average analyst target price of $27.20/share is reached, and analysts on average are expecting CQP to reach a target price of $34.86/share, which is 24.71% above the recent price of $27.95. Below is a twelve month price history chart comparing the stock performance of APLP, RMP, and CQP:

APLP, RMP, and CQP Relative Performance Chart

Combined, APLP, RMP, and CQP represent 10.85% 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 $7.96 $9.19 15.45%
Archrock Partners LP APLP $15.48 $21.75 40.50%
Rice Midstream Partners LP RMP $21.36 $27.20 27.34%
Cheniere Energy Partners L P CQP $27.95 $34.86 24.71%

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 APLP — FREE
Get the latest Zacks research report on RMP — FREE
Get the latest Zacks research report on CQP — FREE

More from Stocks

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

REPLAY: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

REPLAY: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

This Should Be Your Retirement Savings Plan When the Stock Market Crashes

This Should Be Your Retirement Savings Plan When the Stock Market Crashes