Needless to say, the past six weeks have been gut-wrenching for investors. What could possibly be worse? The month of September for energy master limited partnership (MLP) investors. According to a new research report from the MLP analysts at Merrill Lynch, depending on the final tally, September was possibly the worst month in history for the MLP sector. They also pose the question, “Could sentiment possibly get more negative?”

The answer is not likely, and the Merrill Lynch team expect a “business as usual approach” to the third quarter midstream MLP cash distribution announcements. While earnings and distributions will be closely watched, one thing is for sure: investors with patience and dry powder may end up making one of the best investments of a lifetime.

We screened the Merrill Lynch list of energy MLPs rated Buy and found three that look particularly enticing now. Don’t forget that MLP distributions may include return of capital.

Buckeye Partners

This top MLP has traded all the way back to levels it was at in March of 2013. Buckeye Partners L.P. (NYSE: BPL) owns and operates a diversified network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage and marketing of liquid petroleum products.

Buckeye is one of the largest independent liquid petroleum products pipeline operators in the United States, in terms of volumes delivered, with approximately 6,000 miles of pipeline and more than 120 liquid petroleum products terminals with aggregate storage capacity of over 110 million barrels across our portfolio of pipelines, inland terminals and an integrated network of marine terminals.

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The Merrill Lynch team noted after solid second-quarter earnings were reported that the performance reflects the stability of the company’s cash flows in what has been and will remain a volatile pricing environment, and they also noted the improved asset utilization. The analysts also cited the strong refined product volumes that helped to offset lower butane blending margins.

Buckeye Partners investors a paid an outstanding 7.95% distribution. The Merrill Lynch price objective is a monster $88. The Thomson/First Call consensus price target is $81.72. Shares closed Wednesday at $59.27, up over 6%.
Enterprise Products Partners

This is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) once again, despite the energy slump, just raised the distribution 1%. The company maintains a very good long-term position in the market. It provides many of its services on the basis of long-term, fixed-fee contracts, insulating against some of the wilder swings of the commodities that it trades in.

One reason why many analysts may have a liking for the stock might be its distribution coverage ratio. That ratio is well above one times, making it relatively less risky in the MLP sector. The company’s distributions have grown for several quarters and are expected to continue in 2016.

Investors are paid very solid 6.36% distribution. The Merrill Lynch price target is a huge $41. The consensus target is lower at $37.41. Shares closed Wednesday at $24.90.

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Martin Midstream Partners

This top stock is down an astonishing 50% from highs printed this time two years ago. Martin Midstream Partners L.P. (NASDAQ: MMLP) has a very diverse set of operations focused primarily in the United States Gulf Coast region. Its primary business lines include:

1. Terminalling, storage and packaging services for petroleum products and by-products
2. Natural gas liquids transportation and distribution services and natural gas storage
3. Sulfur and sulfur-based products processing, manufacturing, marketing and distribution
4. Marine transportation services for petroleum products and by-products

The company had a very strong second quarter for 2015. Cash flow from operations exceeded plan and the positive impact of stable cash flows from acquisitions made during 2014 helped to reduce the impact of seasonal cash flow swings that historically happen during the summer months.

Martin Midstream investors are paid a huge 13.25% distribution, which always could be trimmed. The Merrill Lynch price target is a whopping $42, and the consensus target is $34.25. Shares closed Wednesday at $24.40.

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It will take patience for these stocks to hit the lofty price targets that Merrill Lynch has set. With that in mind, there is every reason to believe that in 18 to 24 months these top companies could see much higher share prices, and in the meantime, investors can collect distributions and wait.

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