- "Playing defense is the way to go" among energy MLPs because the worst may not be over in the oil and gas industry, says Morningstar analyst Peggy Connerty, who nevertheless finds a few MLP value plays worth considering.
- The group is growing riskier, with more firms no longer able to reach 1x distribution coverage, cash distribution growth rates coming down, and several firms have cut capex plans for next year, which Connerty thinks is only just beginning as management teams begin working on 2016 budgets.
- But "a handful of names" in the sector are in decent shape despite the challenging backdrop, Connerty writes, with Magellan Midstream Partners (NYSE:MMP), Spectra Energy Partners (NYSE:SEP) and Enterprise Products Partners (NYSE:EPD) standing out because of their solid balance sheets, decent coverage of cash distributions, and stellar management.