MPLX - MPLX LP: This 8%-Yielding MLP Is Still A Buy Now
2024-05-01 07:30:00 ET
Summary
- In the last four and a half months, units of MPLX LP have doubled the S&P 500 index.
- Pricing power and relatively steady pipeline throughputs helped the MLP's adjusted EBITDA and distributable cash flow climb higher in Q1.
- The company's leverage ratio further improved during the first quarter, which supports the investment-grade credit rating.
- Units of MPLX could be marginally discounted at the current price.
- The MLP could provide an attractive starting income with room to grow in the years ahead.
As part of my investing strategy, I like to buy growing businesses that throw off tons of cash flow. This is because all stocks (even story stocks) are eventually valued by the market for their cash flow and earnings power.
Even better, I tend to buy stocks that are fairly valued or even discounted relative to my fair value estimates. Aside from companies with deteriorating fundamentals, overpaying is the biggest killer of total returns, as a business then has to grow into its valuation. By avoiding stocks that are meaningfully overvalued, I usually don't fall victim to valuation multiple contractions....
MPLX LP: This 8%-Yielding MLP Is Still A Buy Now