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San Antonio, Texas-based NuStar Energy, L.P. (NS) is a master limited partnership (MLP) that engages in the transportation and storage of crude oil as well as refined products in the U.S., the Netherlands Antilles, Canada, Mexico, the Netherlands, and the U.K.The continued downward pressure on MLP units is primarily due to concerns about liquidity, since most of the long-haul pipeline operators have limited, if any, commodity-price exposure. Our preferred MLPs (which includes NS) generate stable cash flows, are investment-grade credits and provide for distribution growth.NuStar's current quarterly distribution of $1.0575 per unit (annualized run rate of $4.23 per unit) represents an attractive yield of 11.07%. We believe that the partnership can easily maintain distribution growth in the 6%-7% range over the next few years. With an above peer-group average distribution coverage level and a GP IDR cap of 25%, NuStar's distribution growth prospects remain ...

NuStar Energy L.P. (NS) is expected to post solid third-quarter results on the back of stronger margins and higher sales volumes from the new asphalt business and increased pipeline throughput. We continue to like the partnership for its diversified asset base and strong distribution-growth prospects. Our new $56 price objective, up from $54 before, reflects a distribution run rate of $4.25 per unit and yield of 7.65%.

The inclusion of the asphalt business in the asset mix further adds to the partnership’s diversification and growth prospects. A strong pipeline of organic growth projects and contribution from acquisitions provide the partnership with an above peer-group average distribution coverage ratio. NuStar’s current quarterly distribution of $0.985 per unit represents an attractive yield of 8.15%. We estimate that the partnership can sustain distribution-growth in the 8%-9% annual range over the next few years.

The recent acquisition of CITGO’s asphalt assets helps diversify the partnership

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We are maintaining our Hold recommendation on Sunoco Logistics Partners, L.P. (SXL) units following its strong second-quarter results, which benefited from solid contribution from its Western Pipeline System.

Importantly, the partnership increased its quarterly distribution by 11.7% year-over-year to the annualized rate of $3.74 per unit. While the partnership no doubt offers strong distribution-growth prospects, we believe that to be already reflected in its premium valuation relative to the peer group, thereby offering limited upside from current levels. Our preferred names in this space remain Enterprise Products Partners L.P. (EPD), NuStar Energy L.P. (NS) and TC Pipelines, L.P. (TCLP).

The partnership’s earnings have grown to $195 million over the last twelve months. In recent transactions, Sunoco Logistics acquired a 50% interest in a refined products terminal from Mobil Pipe Line Company for approximately $13.4 million. In April, Sunoco bought a refined products pipeline system in Texas and

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