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Even if natural gas prices are near a historic low, the logistics of having to move energy to where the demand is have favor midstream energy infrastructure master limited partnerships, and this is one more long-term story about the importance of natural gas.

Deutsche Bank is continuing to support this story even though it's one of the better known investment theses in the energy sector and has resulted in some of the best returning stocks and biggest M&A takeouts in the past year, namely Kinder Morgan's ( KMI) takeout of El Paso ( EP).

Deutsche Bank estimates that these midstream MLPs will generate total returns above 10% on an annualized basis for the next several years. MLPs also show an average yield of 6.3%, 6%- 8% distribution growth and 5%-10% growth in earnings and cash flows.

Deutsche placed buy ratings on Enterprise Products Partners ( EPD), Equity Transfer Partners ( ETP), Kinder Morgan Energy Partners ( CXPO) and Rose Rock Midstream ( RRMS) and Western Gas Partners ( WES). Deutsche projects that all of these midstream MLPs will generate in excess of 18% total returns.

These stocks have three ways to grow: Organic, drop-downs and third party acquisitions.

In conceding that MLPs are far from an undiscovered story at this point, Deutsche noted that the group showed a 13% total return in 2011 vs a 2% rise in the S&P 500 (including dividends). However, it sees the MLPs as one more "unique secular growth story" related to natural gas and the larger shale drilling boom in the U.S.

"The need for infrastructure construction in North America to match rising natural gas, oil and natural gas liquids (NGLs) volumes is unprecedented. We estimate North American infrastructure spending of $20 billion per year through 2015 for pipelines, gathering and processing, terminals, and storage. The relative security and stability of fee based business and contracts support the ability of the industry to raise the equity and debt capital needed to build its growth," Deustche analysts wrote on Tuesday.

>>To see these stocks in action, visit the Natural Gas Stock Trades That Look Past Low Prices portfolio on Stockpickr.

-- Written by Eric Rosenbaum from New York.


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