On Sep 25, Oasis Midstream Partners LP OMP was raised to a Zacks Rank #1 (Strong Buy), implying that the stock will significantly outperform the broader U.S. equity market over the next one to three months.
Why the Upgrade?
Over the past 60 days, the Zacks Consensus Estimate for the partnership’s 2018 earnings has been revised upward from $1.74 to $1.82. The Zacks Consensus Estimate for 2019 earnings moved up to $2.91 from $2.67 over the same time frame.
The master limited partnership operates diversified midstream energy infrastructure that offers steady fee-based revenues, reflecting a low-risk business model. Oasis Midstream’s prime operations include gathering and processing of natural gas. The midstream assets are also involved in the gathering and transporting of crude oil.
The partnership’s midstream properties are being used primarily by its parent Oasis Petroleum Inc. OAS, the leading explorer and producer of oil and natural gas in the prospective Williston Basin. Oasis Midstream is also well positioned to offer services to other premium producers in the basin.
Given that natural gas is being increasingly preferred for clean energy needs and oil prices are strengthening, the production of both the commodities should increase. Higher production will likely boost the demand for the partnership’s midstream assets. In fact, we expect Oasis Midstream to witness earnings growth of 323.3% and 60.1% in 2018 and 2019, respectively.
All these developments are reflected in the leading midstream energy provider’s impressive price chart. Over the past year, the stock has rallied 25.2%, outperforming the 0.7% decline of the stocks belonging to the industry.
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Other Stocks to Consider
Other prospective players in the energy sector include Shell Midstream Partners LP SHLX, and Petroleo Brasileiro S.A. or Petrobras PBR. Both Shell Midstream Partners and Petrobras sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shell Midstream Partners has an average positive earnings surprise of 7.9% for the last four quarters.
Petrobras’ bottom line beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.4%.
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