Zacks Investment Ideas feature highlights: Buckeye Partners, Enbridge Energy Partners and Sunoco Logistics Partners

 Zacks Investment Ideas feature highlights: Buckeye Partners, Enbridge Energy
                    Partners and Sunoco Logistics Partners

PR Newswire

CHICAGO, Dec. 19, 2012

CHICAGO, Dec. 19, 2012 /PRNewswire/ --Today, Zacks Investment Ideas feature
highlights Features: Buckeye Partners (NYSE:BPL), Enbridge Energy Partners
(NYSE:EEP) and Sunoco Logistics Partners (NYSE:SXL).


Pipeline to Profit

The idea that oil production in the United States is growing is not something
that is new to most investors. One state that is seeing a significant reversal
of fortunes thanks to oil gushers is North Dakota. It was recently released
that oil production from that state increase 16,000 bpd to nearly 750,000 bpd,
and is expected to continue to grow from there.

I discussed in a Real Time Insight how oil prices were moving lower and what
might be behind the move. In the comments, John Blank, Kevin Cook and I talk
about a few other macro ideas as well as US oil production.

But What is the Play?

Even if the price of oil goes down, there is still a good investment idea to
come out of this. The oil has to get to the refinery before it is ready for
downstream consumption. It will generally get to the refineries via pipelines.
The pipeline companies are really not subject to the volatility in the price
of oil as they are more of a toll both with long term contracts.

Let's take a look at a few pipeline companies that might be good investments
for 2013. My first pick is Buckeye Partners (NYSE:BPL). It's not my first pick
because I was born in the state of Ohio and a big fan of THE Ohio State
University, but more because of its pipeline footprint. Its pipelines are in
the Midwest, covering upper Illinois, Indiana, Ohio and Pennsylvania. That
will serve to bring the oil to the areas of higher demand.

The company doesn't have the best track record when it comes to beating the
street, but it may have turned the corner in the most recent quarter. The
company posted EPS of $0.87, $0.14 or 19% more than the Zacks Consensus
Estimate of $0.73. Prior to the most recent quarter, the company posted six
straight misses. Hopefully the pipe is now flowing in the right direction.

BPL has an attractive valuation, with the majority of the metrics coming in
below the industry average. Trailing twelve months PE of 17.8x is lower than
the 23x industry average, but more impressive than that is the 16x forward PE
multiple when compared to the 24.6x industry average. Price to book of 1.7x is
below the industry average of 2.6x and the price to sales of less than 1x
rounds out the metrics review. All of these measures suggest that BPL trades
at a discount to its peer group.

BPL is currently a Zacks Rank #3 (Hold) but could move higher on our ranking
system as earnings estimates increase and the company delivers more positive
earnings surprises. The stock yields 8.8%.

Enbridge Energy Partners (NYSE:EEP) is another pick in the same space, and
maybe a little more directly focused on the North Dakota space. Along with the
other Enbridge companies, EEP is more focused on the Sandpiper project, a
pipeline system that is dedicated to growing North Dakota oil fields. That
pipeline system should run from western North Dakota through Minnesota and
then connect to the US Mainline Expansion pipeline that that company operates.

Like BLP, EEP had a pretty poor record of beating the number. The most recent
quarter was a positive earnings surprise of $0.02 or 7.4%. Prior to that, the
company missed six straight reports. With more positive earnings surprises,
the company could improve its Zacks Rank from a #3 (Hold) to a #1 (Strong Buy)
or a #2 (Buy).

EEP is priced a little higher than BPL, but for the most part is in line with
industry averages. The trailing and forward PE are slightly higher than the
industry averages of around 24x. The price to book multiple of 1.3x is half
the industry average of 2.6x and the price to sales multiple comes in right at
1x... also below the industry average of 1.4x. The stock also yields 7.8%.

Higher Ranked

If you are looking for a stock that has a higher Zacks Rank and is also in the
same industry, look at Sunoco Logistics Partners (NYSE:SXL). The stock is
currently a Zacks Rank #2 (Buy) and has a better track record and valuation
than the two other stocks.

Six straight positive earnings surprises and growing revenues make this stock
an analyst favorite and that is reflected in the consistent growth in EPS. The
company started the year with a 2012 earnings estimate of $2.48, but closes
the year at $3.96. That is quite a move.

The valuation of SXL is very attractive, with a forward PE of 12x being about
half the industry average. Price to book of 3.5x is higher than the industry
average of 2.6x but the price to sales of 0.4x more than makes up for the high
price to book multiple.

SXL is not focused on North Dakota, but does have assets throughout the
northeast and in Texas. So this is not as direct of a play on the plain states
oil, but it does have exposure to the end product. The stock yields 4.1%.

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