When it comes to energy, stick with quality

Enterprise Product Partners may be among the shrewdest oil companies in the land.

By Jim Cramer Feb 7, 2013 9:59AM
thestreet logoNatural gas plant Kevin Burke CorbisIt happened again. Another master limited partnership secondary and another win.


This time it is Enterprise Product Partners (EPD) with an 8 million share secondary priced at $54.56, a deal where about a dozen execs and board members so far have filed that they participated in, all with sizable amounts.


Of course the money will be used to pay down debt so the company can expand once again.


Enterprise Product Partners may be among the shrewdest oil companies in the land. It has major pipe coming in and out of all the important shales: Eagle Ford, Permian, Haynesville, Barnett and Marcellus. It is the pipeline company that has just about the best exposure to the huge petrochemical refineries that crave the natural gas liquids feedstock.


It transports an astounding 4.3 million barrels of natural gas liquids, oil, refined product and petrochemicals a day. And it pays 66 cents per unit each quarter, just giving you a 6.5% increase.


Like many of the MLPs, Enterprise can't lay down pipe fast enough, even as its vast network would seem to have pretty much every important field but the Bakken covered.

Enterprise is the outfit that with Enbridge is trying to alleviate the Cushing glut that is causing the bizarre dichotomy between the low West Texas price and the high Brent price. These two companies are already pumping 400,000 barrels a day out of Cushing using the Seaway pipe, which, if you recall, used to go the other way but now that there is so much oil going into Cushing there's no room for the stuff. But there's so much more oil that Enterprise is expanding that pipe at a voracious pace.

These master limited partnerships are notorious issuers of stock. EPD is only about a point-and-a-half off its high and it did trade down to $49 from $55 not that long ago on the usual scare that Congress would change the tax status of the company.


But I think it's still a decent entry point to get some of this 4.79% yielder. I would put on half and then hope it goes to a 5% yield through price depreciation.


Keep in mind this is the Big Daddy of all of the MLPs at $50 billion. It will sell down if another big MLP offers stock. Still, it is the highest quality and has the biggest opportunity of all of them right now, even bigger than Kinder Morgan (KMP) and certainly more than Energy Transfer Partners (ETP), even as ETP yields 7.7%. Trust me, I learned the hard way that the yield cannot make up for the price depreciation when the company isn't boosting the distribution or is as poorly run as ETP.


Stick with quality. It's obvious that the insiders sure are. Who am I to say they are wrong? I just hope you get a chance to buy it underneath their price.




Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.



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Feb 7, 2013 1:06PM
Did anyone hear Obuma;'s speech on Superbowl Sunday?
"If we are going to get serious about the deficit , we will need to increase revenue"

I mean HOW does anyone with a scintilla of sense NOT ask themselves==
Wait- isn't this the fool that doubled our deficit ?
 Added 6 TRILLION and it's still growing ?
more in one term, than ANY OTHER president in our history ?
Is this the same guy ? Why yes it is !

NOW he wants to get serious?
The first 4 years of failure - We don't count that anymore
Wow - the hypocrisy of this empty suit is amazing.
The ultra incredible part is the lapdog media and his entire base of darkies , deadbeats , beggars and low information /low IQ folks never call him out on it.


Feb 7, 2013 12:59PM
uhh - Hello UE going the WRONG way, in case you haven't noticed
46 months in a row of slightly lower or over 8% - a disgrace
No jobs
Housing market still down 40%
Taxes went up are going up.
46 million people on foodstamps

Yes, Happy days are here again !

Feb 7, 2013 2:26PM
When is the most fundamentally sound time to invest in stocks?  When we have 4% dividends, 5% interest rates and 6% unemployment.  Anything outside of these parameters is an imbalance and all will eventually gravitate to these means tested medians.  I know it takes time but these are the numbers.  Let this be your advantage and understand the movements to these are the natural economic givens all business's indeed function best at.  Playing these imbalances is indeed tricky because they are just that, induced imbalances. Eventually these phoney politically influenced movements will die off.  I know it may seem like a long time in an individuals life but over the history of the market the last 15 years will just be a minor blip.  JMHO
Feb 7, 2013 2:12PM
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Feb 7, 2013 11:52AM

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Feb 7, 2013 12:54PM
Hey Re Todd - Do tell -- Beyonce's "performance" was great , right ?
Such talent !!
So classy, such dignity.
Didn't all the great grandchildren love It ?

Feb 7, 2013 12:08PM
Feb 7, 2013 5:40PM
Yes - In 20 years it should go to 2%
How's that ?
Sounds good , right?
My backup data for this profound statement ?
uh ,ummm , ahhh

Feb 7, 2013 11:20AM

it's truly interesting that company 401K mutual fund plans AVOID having any funds that follow the energy industry. 


for the average guy, 401K mutual funds are the primary way to invest for our future.  yet access to this energy venue is prohibited. 

Feb 7, 2013 12:57PM
Feb 7, 2013 12:04PM

Why not just say "When it Comes to Stocks Stick with Quality"


Bobo's advice is ridiculous at best and his performance is dismal.

Feb 7, 2013 3:15PM
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Feb 7, 2013 1:40PM
Do Wall Street Insiders Expect Something Really BIG To Happen Very Soon?
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Feb 7, 2013 12:18PM
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Tomorrow, go long on the Euro against the dollar and short stocks as a hedge.  Close out before the end of the day and as always, don't chase the cash.
Feb 7, 2013 12:52PM
Still stalking me and begging , I see. Not much has changed.
The usual darkie, beggars,  pimping all things Obuma.
Just remember
Bin Laden's Dead
GM's alive !

Hey, did you happen to notice his birther case is going to the Supreme Court?
What-- Acorn and MSN didn't report on it ?
Look it up.
Maybe you'll smarten up
I doubt it, though
Hail- Barrack Hussein Barry Harrison J Bournel Soetoro Obama !

Feb 7, 2013 5:32PM
Re Tod - Where are you getting your "data" from , Dear Leader Obuma?
WHY would U/E go to 6%
Dear Leader told you ?
He told us ALL a lot of sheet.
Most of it lies
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Feb 7, 2013 9:06PM
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Feb 7, 2013 11:01AM
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Feb 7, 2013 5:26PM
Lamo Pat - Whatever, fool.
I'm sure I pay my landscaper per month , more than you earn in your "business" for a year
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What , you post while driving this huge limo "business" ?
A taxi driver that speaks a little English !

Feb 7, 2013 5:03PM
Not sure his mouth and his brain are connected . . .
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