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Calumet Specialty Products Partners L.P. (CLMT - Snapshot Report) – producer of specialty hydrocarbons in North America – raised its third quarter 2012 cash distribution to 62 cents per unit ($2.48 per unit annualized), representing an increase of approximately 5.1% sequentially and 24.0% year over year.

Calumet Specialty Products’ announced distribution boost is in sync with its goal of delivering disciplined growth to unitholders. The partnership boasts a consistent and improving financial policy with high distribution coverage. Calumet Specialty Products’ new distribution is payable on November 14 to unitholders of record as on November 2, 2012.

Indianapolis-based Calumet Specialty Products Partners is a publicly traded master limited partnership that is engaged in the production of customized lubricating oils, solvents, waxes and asphalt from crude oil and other feedstock. The partnership also makes fuel products like gasoline, diesel and jet fuel.

Calumet Specialty Products – which acquired the 45,000 barrels-per-day (Bbl/d) Superior (Wisconsin) refinery from El Dorado, Arkansas-based Murphy Oil Corp. (MUR - Analyst Report) last year – currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.

It's not too often one can find a stock with big earnings growth and a high yield. But in the case of Calumet Specialty Products Partners, a current year earnings growth projection of 147% coalesces with an 8% distribution. Yet, it also exhibits low valuation metrics, with a forward P/E of just 9.4 and a price-to-sales (P/S) ratio as low as 0.5.

Calumet Specialty Products has a proven record of growth through acquisitions. The partnership has been aggressive in purchasing assets that help support its cash flow stability and complements its business. The latest in this series is the proposed buyout of a small refinery in Montana for about $120 million. The transaction – expected to close in the fourth quarter – will enhance Calumet’s refining capacity by a further 9,800 Bbl/d and be immediately accretive to its cash flows.

Presently trading near its 52-week high, units of Calumet Specialty Products have climbed 25% during the past three months. With accretive acquisitions, widened crack spreads and a PEG ratio of less than 1.0, the partnership looks like a compelling value play with a potential for further upside.

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