This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

4 Stock Strategies From Wall Street: Feb. 15

(Story updated with fourth stock strategy idea)
NEW YORK ( TheStreet) -- In today's daily series of investing strategies from Wall Street, analysts talk about the benefits of investing in master limited partnerships and revisiting the home furnishings industry.

1. Tap Into Energy Infrastructure Growth Through MLP's.

"The need for infrastructure construction in North America to match rising natural gas, oil and natural gas liquids volumes is unprecedented," say Deutsche Bank analysts, who estimate that in North America, infrastructure spending will reach $20 billion a year through 2015 for pipelines, gathering, processing, terminals and storage. They also believe the industry's secure and stable streams of income through its fee-based businesses and contracts will continue to be conducive to its ability to raise the debt and equity.

One of the best ways, they say, to tap into this growth in energy infrastructure construction is through master limited partnerships, which combine the tax benefits of a limited partnership with the liquidity of common stock. An MLP isn't a corporation, but its stock trades on major exchanges just like a publicly-traded company.

The Deutsche Bank analysts say that the MLPs they're covering will likely provide total returns of above 10% on an annualized basis for the next several years. Right now, they have an average yield of 6.3%, with 6% to 8% distribution growth as well as 5% to 10% earnings and cash flow growth. Also, they have a yield premium of 391 basis points over the ten-year Treasury. MLPs, which have to derive most of their cash flow from real estate, natural resources and commodities, showed a 13% total return last year, compared with a 2% rise in the S&P 500, according to the Deutsche Bank researchers.

They're particularly enamored with Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), Kinder Morgan Energy Partners (KMP), Rose Rock Midstream (RRMS) and Western Gas Partners (WES), predicting 18% total returns in the coming years. Kinder Morgan Energy Partners, Energy Transfer Partners, Rose Rock Midstream and Western Gas Partners' growth will likely come organically, through third-party acquisitions and through drop-down deals in which the general partner sells assets such as pipelines or gas-processing facilities directly to the MLP. These deals are usually highly accretive to cash flow and allow the MLP to boost distribution payouts immediately. The equity research analysts think that Enterprise Products Partners will prove to be the "leader" in organic growth, with its top of line assets.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs