Excerpt from Raymond James strategist Jeffrey Saut's latest essay (published Monday, May 9th):
...Accompanying the “commodity crack” was an “MLP Melt” (Master Limited Partnership), as rumors swirled that any new tax law would eliminate the MLPs’ advantage of “pass through” taxation. As MLPinvestor notes:
“In an MLP investors who invest directly in LP units only pay taxes on the cash distributed to them. That is, taxes are not paid at the entity level only at the investor unit level. This is often referred to as ‘pass-through’ taxation, and is a huge advantage for MLPs.”
We think the odds of such legislation passing are de minimis, and therefore view the MLP pullback as a buying opportunity. To reiterate a few of our favorite names: LINN Energy (LINE/$37.63/Strong Buy); Enterprise Products Partners (EPD/$41.36/Strong Buy); Teekay LNG Partners (TGP/$35.10/Strong Buy); EV Energy Partners (EVEP/$54.50/Outperform); and Atlas Pipeline (APL/$32.74), which is followed by our research correspondent with a favorable rating.
...In addition to the names mentioned in these missives over the last few weeks, our friends at Bespoke have listed “Top Triple Plays,” which focuses on companies that have beaten earnings and revenues estimates and raised guidance. Four from the list covered by Raymond James include: Select Comfort (SCSS/$16.60/Strong Buy); Polaris (PII/$103.70/Strong Buy); Plexus (PLXS/$35.86/Strong Buy); and Arrow Electric (ARW/$44.67/Outperform).