On January 9, 2013,
Buckeye Partners L.P.
) recommendation was upgraded to Neutral from Underperform on the
back of increased returns from the partnership's organic as well
as inorganic development projects. Buckeye Partners, which is
engaged in pipeline systems business, retained its Zacks Rank #3
(Hold) after posting mixed financial outcomes in the third
Why the Upgrade?
The partnership's third quarter 2012 earnings stood at 87
cents, comfortably beating the Zacks Consensus Estimate of 73
cents as well as the year ago figure by 36%.
Following the third quarter results, the Zacks Consensus
Estimate for the fourth quarter 2012 reflected a sharp increase
of 28.13% year over year to 82 cents. The Zacks Consensus
Estimate for the first quarter 2013 treaded the same path,
surging 42.06% year over year to 77 cents. Similarly, earnings
projection for 2013 also moved up markedly by 20.63% to $3.38 per
Furthermore, the partnership's solid cash flow generation
during the third quarter is expected to invite favourable
investment prospects in the future. Moreover, Buckeye's
consistent cash distribution pay-out of $1.0375 per unit will add
value to the partnership's unitholders.
We believe the partnership's Bahamas Oil Refining Company
International Limited ("BORCO") facility and Perth Amboy unit
will contine to add to near-term top-line growth. BORCO's
contribution to the revenue increased 9.8% year over year,
driving solid results. This stemmed from the 1.1 million barrels
of supplementary storage, which became operational during the
Additionally, the acquisition of the 20% stake in the Wespac
Pipeline-Memphis LLC will further accentuate returns in the long
Other Stocks to Consider
Apart from Buckeye Partners, other stocks in the oil and gas
pipeline sector that are currently performing well include
Boardwalk Pipeline Partners, L.P.
Plains All American Pipeline, L.P.
). Boardwalk Pipeline holds a Zacks Rank #1 (Strong Buy)
while Plains All American retains a Zacks Rank #3
BUCKEYE PARTNRS (BPL): Free Stock Analysis
BOARDWALK PIPLN (BWP): Free Stock Analysis
PLAINS ALL AMER (PAA): Free Stock Analysis
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