On May 8, Zacks Investment Research upgraded Tulsa,
Oklahoma-based publicly traded energy pipeline partnership
Magellan Midstream Partners, L.P.
) to a Zacks Rank #2 (Buy).
Why the Upgrade?
Magellan Midstream boasts of a strong portfolio of energy
infrastructure assets, capacity expansion plans and a sound
liquidity position. Other positive attributes include its
investment grade rating and strong track record for distribution
Magellan Midstream owns an attractive portfolio of energy
infrastructure assets that generate stable and recurring fee- and
tariff-based revenues. This includes the longest U.S. refined
petroleum products pipeline system, access to more than 40% of
refining capacity in the continental U.S. along with imports, and
85 petroleum terminals with more than 80 million barrels of
Magellan Midstream has established a track record of consistent
distribution growth - its current quarterly distribution of 50.75
cents per unit ($2.03 per unit annualized) is up by 287% since
its initial public offering (IPO) at the beginning of 2001.
Lucrative acquisitions and organic growth projects have made
major contributions toward Magellan Midstream's development. Over
the last 9 years, the partnership has invested nearly $3 billion
for various ventures and takeovers. For 2013, the partnership
plans to spend approximately $900 million on growth, with
expenditures of $320 million thereafter required to complete
these projects. Additionally, the partnership continues to look
out for more than $500 million of potential growth projects in
the earlier stages of development.
Financially, Magellan Midstream's investment grade credit ratings
provide a competitive advantage in accessing capital at
reasonable cost. Additionally, with no near-term debt maturities
and an $800 million revolver available under credit facility, the
partnership is well equipped to face this highly uncertain period
for the economy.
Based on the success of the partnership's high-quality and
diverse portfolio of midstream assets, analysts are predicting
strong earnings growth for Magellan Midstream over 2013 and 2014.
The 2013 Zacks Consensus Estimate of $2.23 represents earnings
per unit growth of 11% over 2012. The Zacks Consensus Estimate
for the next year is $2.54, corresponding to an impressive 14%
Other Stocks to Consider
In addition to Magellan Midstream, there are certain other energy
pipeline partnerships like
Enbridge Energy management LLC
Kinder Morgan Management LLC
Summit Midstream Partners L.P.
) that offer value and are worth buying now. All these firms
sport a Zacks Rank #2 (Buy).
ENBRIDGE ENERGY (EEQ): Free Stock Analysis
KINDER MORG MGT (KMR): Free Stock Analysis
MAGELLAN MDSTRM (MMP): Free Stock Analysis
SUMMIT MIDSTRM (SMLP): Free Stock Analysis
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