One of the largest publicly traded MLPs, ONEOK, Inc. (OKE 34.22 NYSE – yield 4.90%) is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. It owns one of the nation’s premier natural gas liquids (NGL) systems, connecting NGL supply in the mid-continent and Rocky Mountain regions with key market centers. Given the current glut and multi-year low prices in natural gas, it might seem premature to dive into a MLP whose businesses are all natural gas-related. But ONEOK is relatively immune to the sector’s weakness. It provides essential, nondiscretionary services to producers and customers via predominately fee-based services, and recent contract restructurings have reduced its sensitivity to shifts in gas prices. Meanwhile, its natural gas exposure has resulted in attractive valuations. Its units now trade at a P/E below 0.7 of the average for the entire MLP universe – their lowest relative valuation in 10 years. Once gas production and prices rebound, the upside potential is considerable. ONEOK has strong business fundamentals and above-average potential for payout increases. Its solid balance sheet and ample liquidity also distinguish it from many similar investments.”
Genia Turanova, The Complete Investor