Wunderlich Expects Strong Distribution Growth From Magellan Through 2013
Wunderlich Securities has published a research report on Magellan Midstream Partners (NYSE: MMP) and has initiated coverage on the company with a Buy rating.
In the report, Wunderlich writes "The partnership's distribution growth over the next several years should be strong at an estimated 4% in 2010, 6.8% in 2011, and 6.3% in 2012. The partnership is well-positioned to take advantage of its lower cost of capital, in our opinion.
Of all the MLPs that one can say you probably can die with this one still in your portfolio is MMP.
I remember when they were the first to buy out their GP and agreed to pay 11x ebitda... Citi downgraded to hold because they thought the price was too rich.... note that EPD, NRGY and BPL paid over 20x for their GPs this year.
I bought MMP on the downgrade news because I thought Citi was painting a picture with a short term broad brush instead of looking at the long term.
The organic growth potential of the pipeline system bought from BP is a big unknown but it is ideally located for add-ons and extensions.
Everyone is adding to Cushing storage but MMP has the lowest cost of debt and equity to do their expansion than their competitors.
Finally, mgmt has woken from a slumber and is aggressively pursuing new opportunities. I suspect we will see another deal that will make the shareholders just as happy as the BP deal.