SUN

Does Sunoco LP (SUN) have what it takes to be a top stock pick for momentum investors? Let's find out.

Sunoco LP (SUN) reported earnings 30 days ago. What's next for the stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Here is how Sunoco LP (SUN) and Talos Energy (TALO) have performed compared to their sector so far this year.

Sunoco is significantly undervalued, trading at a 5.07x forward P/OCF versus its 10-year average of 6.35x, despite rapid operating cash flow growth. Recent large acquisitions, including Parkland and Offen Petroleum, have doubled SUN's adjusted EBITDA and DCF year over year, fueling robust earnings momentum. SUN is committed to quarterly dividend hikes of at least 1.25%, targeting 5% annual growth, with a likely 10% increase this year due to a large one-time hike.

Midstream MLPs and corporations generally posted strong second-quarter earnings, benefiting from record volume throughput, strong margins, and robust demand for natural gas and natural gas liquids (NGL) exports. Companies also demonstrated the defensive nature of their fee-based cash flows.

Sunoco pairs a discounted valuation with rising distributions and broader assets, but high debt and refinery volatility keep the growth case risky.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price.

Here is how Sunoco LP (SUN) and Talos Energy (TALO) have performed compared to their sector so far this year.