Under-the-Radar Energy Stocks for Today

Energy companies Sunoco Logistics and Enterprise Products Partners show that being small is sometimes better.
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The biggest oil companies, such as

Chevron

(CVX) - Get Report

,

Exxon Mobil

(XOM) - Get Report

and

British Petroleum

(BP) - Get Report

, used to offer the largest dividends and lowest correlation to the stock market, luring investors during tough economic times.

The behemoths have been surpassed in some respects by much smaller companies.

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The following two energy companies, rated "buy" by TheStreet.com Ratings, are among the biggest beneficiaries of an oil rebound. The price of crude rose to a six-month high last week, and a Platts analysis of official industry data indicated that China's oil demand posted its first year-over-year increase in six months.

Only 35 of 391, or 9%, of energy stocks covered by TheStreet.com Ratings earn "buy" recommendations.

Philadelphia-based

Sunoco Logistics Partners

(SXL)

was formed to own and operate

Sunoco's

(SUN) - Get Report

refined product and crude oil pipelines, and storage facilities. The company generates revenue by charging tariffs for pipeline distribution and storage.

Sunoco Logistics Partners offers an 8% dividend yield and, as a bonus, is trading at a discount in the oil and gas storage industry based on earnings, sales, book value and cash flow. The stock has a price-to-earnings ratio of 8.07, which is 42% cheaper than its average rival.

The company's first-quarter net sales dropped 57% to $1.03 billion, but its operating margins widened, causing earnings per share to more than double to $2.36 from $1.04. Sunoco Logistics Partners' shares have increased 13% this year, while Exxon Mobil and Chevron have each declined more than 10%. The company, which has a market value of $1.6 billion compared with Exxon Mobil's $336 billion, has a remarkably low beta, a measure of stock-market correlation, of 0.1. One is a perfect correlation.

Houston-based

Enterprise Products Partners

(EPD) - Get Report

has a business model similar to Sunoco Logistic Partners', but the company is much larger. It charges tariffs for the use of its natural gas and crude oil pipelines and storage facilities. Facilities are located at critical junctures throughout the Gulf of Mexico as well as Alabama, Colorado and Mississippi.

The stock offers an exorbitant 8.36% dividend yield, the biggest in the industry. Looking at peer valuation in the oil and gas storage and transportation industry, the shares are fairly valued based on earnings and cash flow, but remain cheap when considering sales and book value.

Enterprise Products Partners suffered a 40% decline in first-quarter revenue, but earnings per share dropped only half as much, as profitability grew. The company's stock has climbed 21% this year, outperforming the stocks of industry juggernauts Exxon Mobil, Chevron,

Marathon Oil

(MRO) - Get Report

and British Petroleum.

When it comes to energy, sometimes it pays to go small.