Top Picks 2007: Elliott Gue sees growth & income in gas MLP

Posted Dec 30th 2006 8:30AM by Steven Halpern
Filed under: Newsletters, ETF Investing

Each year, Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Stocks Report.

Enterprise Products Partners (NYSE: EPD), a master limited partnership (MLP), is the top conservative pick for 2007 from energy expert Elliott Gue, editor of The Energy Strategist.

"MLPs trade on the major exchanges just like any stock. But there are some big tax benefits to owning MLPs, offering a combination of high current income and the potential for that income to grow rapidly over time.

"Enterprise Products is the largest MLP in the U.S. Unlike most other big MLPs, Enterprise hasn't slowed its distribution growth substantially in recent years. In fact, the MLP has maintained an impressive 9%+ annualized growth rate in distributions during the past five years. .

"Enterprise owns a mix of businesses but is focused primarily on natural gas. And management has highlighted a slew of organic growth projects to be completed in the next two to three years; Enterprise should be able to maintain solid high single-digit distribution growth through at least the end of the decade.

"In particular, the company owns some of the largest processing and fractionating capacity of any MLP. Fractionation is a process in which various hydrocarbons can also be separated; propane, butane, and ethane often have more value as separate products than they would simply as a component of natural gas.

"Enterprise Products Partners' processing facilities are located in highly attractive regions. Enterprise is well positioned to process gas coming from the deepwater Gulf of Mexico, a rapidly growing production region. With rapid growth in distributions, an enviable pipeline network, and well-placed processing assets, Enterprise is a buy up to 35."

To see Elliott's favorite speculative stock for 2007, click here