Energy

Credit Suisse Says MLP Sell-Off Provids Investors With Attractive Entry Points

Master limited partnerships (MLPs) have provided investors with some of the best market returns so far in 2013. The Alerian MLP Index has gained 20% through June 7, versus 16.3% for the S&P 500. The Alerian Index has pulled back 4% from its recent highs, and the MLP team at Credit Suisse Group AG (NYSE: CS) says it is time to reload on their favorites now at better entry points.

We have written recently about the increase in domestic oil production and the coming American energy independence. The Credit Suisse team is in total agreement and now believe that U.S. oil production is at least two years ahead of their former timeline. They also believe that increased oil production is extremely bullish for the MLPs for a variety of reasons.

Here is a list of top, high-quality MLPs to buy from Credit Suisse. As a reminder, MLP distributions can contain return of principal.

Williams Companies Inc. (NYSE: WMB) is a favorite stock to buy at Credit Suisse. Insiders have bought the stock on the recent decline. The Credit Suisse price target is $49. The Thomson/First Call estimate is lower at $41. Unitholders are paid a 4,0% distribution.

Access Midstream Partners L.P. (NYSE: ACMP) is one of the leading players of the industry. It owns, operates, develops and acquires natural gas, natural gas liquids and oil-gathering systems in the United States. The Credit Suisse target for the stock is $46, while the consensus target is $47. Unitholders receive a 4.2% distribution.

EQT Midstream Partners L.P. (NYSE: EQM) is an aggressive growth stock, as revenue increased 43% last quarter and its income almost doubled. Up more than 130% since its initial public offering, growth prospects remain solid. Credit Suisse has a $47 price objective, the same as the consensus target. Unitholders are paid a 3.2% distribution.

Genesis Energy L.P. (NYSE: GEL) operates in the midstream segment of the oil and gas industry, focusing on pipelines and storage, among other areas. Most analysts anticipate earnings growth of 31% and 29% in 2013 and 2014, respectively. Credit Suisse has a $53 price target, while the consensus is at $51. Unitholders are paid a 3.9% distribution.

Cheniere Energy Inc. (NYSEMKT: LNG) plans to begin exporting liquid natural gas from its first train at Sabine Pass by the end of 2015, with the second train following shortly after. Two more trains are expected to come online in the following year. The company’s Corpus Christi liquefaction facility is targeting a 2017 in-service date. Credit Suisse has a $38 price target, and the consensus is at $38 as well.

MarkWest Energy Partners L.P. (NYSE: MWE) recently raised capital by selling more than 40 miles of recently constructed high-pressure gas gathering pipelines, certain rights-of-way related with the pipelines and two compressor stations totaling more than 21,000 horsepower of combined compression in West Virginia. Credit Suisse has a $73 target, and the consensus is at $70. Unitholders are paid a 4.9% distribution.

Sunoco Logistics Partners L.P. (NYSE: SXL) engages in the transport, terminaling and storage of crude oil and refined products in the United States. Its Crude Oil Pipelines segment transports crude oil principally in Oklahoma and Texas. The Credit Suisse price objective is $72, and the consensus target is quite lower at $66. Unitholders receive a 3.7% distribution.

Targa Resources Corp. (NYSE: TRGP) has put together a combination of natural gas midstream and downstream processing assets that have allowed the company to pay a steadily increasing distribution, by 10% to 12% per year, with every expectation to continue the growth rate into the future. Credit Suisse has an $82 target, but the consensus is much lower at $72. Unitholders are paid a 3.0% distribution.

Credit Suisse stocks to buy at these lower levels may provided investors with fantastic total return potential. We have stressed that, although prices have come in, the market may be poised for a larger correction. Buying half positions now and keeping some powder dry may be a solid game plan.

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