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On Apr 13, Zacks Investment Research upgraded natural gas pipeline operator Energy Transfer Partners LP (ETP - Analyst Report) to a Zacks Rank #2 (Buy).

Why the Upgrade?

Operating environment and growth prospects seem bright for Energy Transfer Partners, as reflected by the rising earnings estimates for this leading master limited partnership (MLP). Over the last 30 days, the Zacks Consensus Estimate for the first quarter of 2013 has increased 11.90% to 47 cents per unit, while that for 2013 went up 11.64% to $2.11 per unit.

The momentum has been strong since Energy Transfer Partners released its fourth quarter and full-year 2012 earnings results on Feb 20. Adjusted earnings per unit came in at 44 cents, in line with the Zacks Consensus Estimate of 44 cents. But adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter was $948 million compared with $493 million in the year-ago quarter, reflecting robust performance from the Interstate Transportation and Storage business unit along with strong margins in all its business segments.

Recently, Energy Transfer Partners announced that it will buy the remaining 60% stake in ETP Holdco Corp from its general partner Energy Transfer Equity LP (ETE - Snapshot Report). With this acquisition, Energy Transfer Partners will own ETP Holdco completely. This deal will simplify its structure and optimize its portfolio.

ETP Holdco was formed in 2012, by Energy Transfer Partners and Energy Transfer Equity. ETP Holdco holds full control over Southern Union Company and Sunoco Inc, both of which are pipeline operators.

The long-term expected earnings growth projections 7.55%, respectively, is also fairly impressive.

We believe Energy Transfer Partners is well positioned to compete in the natural gas midstream, and transportation & storage businesses with its geographically dispersed asset mix. The partnership has a significant market presence in each of its operating areas, which are located in the major natural gas-producing regions of the U.S.

Other Stocks to Consider

There are other MLPs in the energy sector that are also performing well and are worth considering. These include Zacks Ranked #2 Atlas Pipeline Partners LP (APL - Snapshot Report) and Delek Logistics Partners LP (DKL - Snapshot Report).
 

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