Master limited partnership [MLP] NuStar Energy (NS) is currently receiving a favorable outlook from Zacks senior energy analyst Sheraz Mian. Here's why:

"NuStar maintained its positive distribution-growth profile by increasing second-quarter distribution by 3.8% sequentially and 7.3% year over year. A strong pipeline of organic growth projects and improved third-party acquisition prospects following separation from Valero (VLO) remain at the core of the partnership's strong distribution-growth profile.

"With distribution coverage expected to remain at the peer-group high of 1.2x, NuStar remains well positioned to generate distribution growth in the high single digits, at least over the next two years. We continue to like the partnership for its diversified asset base, strong distribution-growth prospects, and attractive valuation.

"Partnership units tend to trade inversely with interest rates such as fixed-income instruments. But unlike bonds, MLP units, which already offer tax advantages, may be used to hedge against inflation through distribution growth.

"Over the last few years, publicly traded pipeline partnerships have significantly
outperformed the broader market indexes. We believe that the favorable acquisition and growth environment that has prevailed during this time period is the primary catalyst for this performance."

Read the analyst note on NS

Read the analyst note on VLO