Better Buy: Magellan Midstream Partners vs. NuStar Energy
The energy industry has been hit hard by low oil prices, which have been nearly as painful for midstream players as they have for exploration and production companies. While drilling for oil and moving it are two very different businesses, they are still tied at the hip.
That helps explain why Magellan Midstream Partners (NYSE: MMP) and NuStar Energy (NYSE: NS) have fallen 30% and 40%, respectively, so far in 2020. Is this an opportunity for long-term investors to pick up a good midstream name -- or even two -- or is there more to the story for these high-yielders?
Master limited partnerships Magellan and NuStar have both been around the midstream space for a long time. Magellan is basically a slow and steady player that's long focused on a mixture of pipeline and storage assets. After recently selling some storage assets, management has decided to break its operations down into two segments. One handles the transportation and storage of refined products (about two-thirds of 2019 operating margins), and the other the transportation and storage of crude oil (the remainder). Roughly 85% of its top line is fee-based, meaning that it largely gets paid for the use of its assets, with the price of the commodities going through them having less of an impact on its performance. Despite the new business breakdown, Magellan is basically doing the same thing it has been doing for a very long time.
Source Fool.com
