The units of natural gas pipeline operator Energy Transfer Partners LP (ETP) soared to a 52-week high of $60.31 on Sep 18, on a slew of positive developments. The closing price of the partnership was $60.22, representing an impressive one-year return of 15.6%.
Why the Bullishness?
Energy Transfer Partners is one of the largest publicly traded master limited partners (MLPs), with a broadly diversified asset base that includes intrastate and interstate pipelines as well as significant midstream and storage properties. With the largest intrastate system in Texas and expanding interstate assets, the partnership is connected to nearly every natural gas shale play in North America, including the Haynesville, Fayetteville and Barnett shales.
Recently, Energy Transfer Partners acquired gasoline retailer Susser Holdings Corp. With the purchase, ETP has significantly expanded its existing retail network as Susser Holdings operates more than 600 Stripes and Sac-N-Pac retail stations – selling gasoline, diesel fuel and convenience store items – with a large footprint across Texas, New Mexico and Oklahoma.
Energy Transfer Partners has been consistently returning value to its unitholders, making it attractive for investors looking for a steady income source. Until the second quarter of 2013, the partnership showed no growth in paid distribution, keeping it at the 2008 level. However, things seem to be panning out well for Energy Transfer Partners lately as the latest distribution represents the fourth consecutive hike for the partnership.
However, acquisitions have historically played a major role in Energy Transfer Partners’ growth profile and are expected to remain significant in the future as well. Hence, although the units of Energy Transfer Partners rose to a 52-week high, the partnership may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.
Energy Transfer Partners holds a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.
Stocks to Consider
One can look at better-ranked players in the energy sector like Sunoco Logistics Partners LP (SXL), Patterson-UTI Energy Inc. (PTEN) and Cameron International Corp. (CAM). All these firms sport a Zacks Rank #1 (Strong Buy).
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