Units of Inergy Midstream LP (NYSE: NRGM) have gained roughly 4 percent since we added the stock to the Growth Portfolio on Jan. 27, 2012, and sold its general partner, Inergy LP (NYSE: NRGY). We prefer Inergy Midstream because of the company’s fee-generating assets in the Marcellus Shale. Inergy LP, on the other hand, generates a sizable chunk of its cash from its lagging propane distribution business.

Elliott analyzed Inergy Midstream’s growth prospects at length in Kicking the Tires. The partnership’s 39.7 percent increase in adjusted cash flow for the quarter ended Dec. 31, 2011, portends well for future growth.

The master limited partnership’s (MLP) transportation segment more than doubled its revenue, while storage and hub services also reported strong gains. As Inergy Midstream’s general partner and a major unitholder in the partnership, Inergy LP will enjoy a sizeable chunk of these gains. But weakness in the propane distribution business, a product of a mild winter and soaring wholesale prices, offset any contribution from Inergy Midstream.

Note that many financial sites list Inergy Midstream’s current yield based on its prorated cash distribution of 4 cents per unit. However, based on the MLP’s full quarterly distribution of 37 cents per share, the units currently yield about 7 percent. With a slate of expansion projects that should enable the MLP to grow its distribution 7 percent to 10 percent annually over the next three years, Inergy Midstream LP rates a buy up to 23.

Enterprise Products Partners LP (NYSE: EPD) last month raised its distribution for the 30th consecutive quarter, providing a preview of its solid results in the final three months of 2011. The blue-chip MLP grew its full-year distributable cash flow (DCF) to $3.7 billion, excluding another $1 billion in one-time gains. These strong earnings enabled the firm to cover its distribution by a robust 1.35-to-1 margin.

The MLP’s midstream infrastructure benefitted from higher fees and throughput, thanks to rising production growth in the Rocky Mountains and the Eagle Ford Shale. The ongoing surge in the production of natural gas liquids (NGL), coupled with rising demand for these commodities, pushed volumes to record levels.

Enterprise Products Partners continues to benefit from an exceptionally low cost of capital and a wide array of growth opportunities. In 2011 the company invested $3.6 billion in organic growth projects, completing a major pipeline and NGL fractionator that will fuel growth in 2012. The company has another $6.5 billion invested in projects under construction. The MLP doesn’t need to issue equity to fund these endeavors.

With the stock overbought at the current price, investors should hold off until the units slip to less than 45.

Magellan Midstream Partners LP’s (NYSE: MMP) DCF hit $131.3 million in the fourth quarter–up slightly from the $128.1 million generated a year ago. This cash flow covered the partnership’s distribution by a 1.42-to-1 margin. For the full year, the MLP generated $4.08 in DCF per unit, up from $3.60 per unit in 2010.

The firm also boosted its distribution (payable on Feb. 14, 2012) by 1.9 percent, the eighth consecutive quarterly increase. Over the past 12 months, Magellan Midstream Partners has increased its distribution by about 8 percent. Management expects the MLP to grow its dividend by roughly 9 percent in 2012.

All of the company’s operating segments posted solid fourth-quarter results. Higher rates at its liquid pipelines offset a slight decline in throughout. On the year, volumes surged 16.4 percent, as capacity expansions enabled Magellan Midstream Partners to almost triple its oil throughput. Ammonia volumes also increased by 57.4 percent in 2011.

CEO Michael Mears expects “the favorable momentum of 2011 to continue…as additional expansion projects come online.” The company spent $200 million on growth projects in 2011 and plans to invest another $430 million in 2012. These endeavors includes reversing the MLP’s Houston-to-El Paso oil pipeline, the Double Eagle Pipeline Project with Copano Energy LLC (NSDQ: CPNO) and the construction of 5 million barrels worth of storage capacity.

All these projects are supported by long-term capacity agreements, providing an extraordinary level of visibility and reliability to future revenue. In addition, management anticipates less than 15 percent of operating margin will be commodity-related in coming years, a figure that could be reduced further if Magellan Midstream Partners divests its ammonia operations. The MLP currently hedges about half of its exposure to commodity prices.

Based on these investments, management expects the MLP to grow its distribution by 8 percent to 10 percent in 2013. This guidance is based on a relatively conservative outlook for pipeline rates and transportation volume, with capacity expansions accounting for the lion’s share of growth.

Oil- and NGL-related infrastructure accounts for about 60 percent of Magellan Midstream Partners’ current growth projects, a favorable waiting at a time when natural gas prices remain depressed.

Although we like the MLP’s long-term growth prospects, the current unit price has outstripped our buy target. At these levels, the stock yields less than 5 percent, which could trigger a correction. Buy Magellan Midstream Partners LP up to 60. Investors who have a substantial gain in the stock should consider taking some profits off the table and reallocating the proceeds to Portfolio holdings that trade below our buy targets.

Spectra Energy Partners LP (NYSE: SEP) grew its full-year cash available for distribution by 22 percent, largely because of the acquisition of an additional 24.5 percent interest in the Gulfstream pipeline in November 2010 and the purchase of the Big Sandy Pipeline in July 2011. This cash flow exceeded management’s guidance and covered the full-year distribution by a 1.16-to-1 margin. The company also benefitted from a project that came onstream in Tennessee.

In the fourth quarter, the MLP grew its cash available for distribution by roughly 8.6 percent from year-ago levels. Spectra Energy Partners in January 2012 hiked its distribution for the 17th consecutive quarter.

The partnership also shored up its balance sheet by renewing a credit facility with 40 percent more borrowing capacity and achieved an investment-grade credit rating.

Management’s initial guidance calls for cash available for distribution to increase by roughly 5 percent in 2012–less than some analysts had expected. Two analysts downgraded the units following the earnings release; only two analysts rate the stock a buy, while nine rate it a hold and two rate it a sell.

Although the stock currently yields 6 percent, the partnership’s underlying business involves little risk. Moreover, as we’ve seen time and time again during this MLP’s relatively brief history, management sets its guidance very conservatively.

Neither management’s guidance nor nonplussed analysts factors in the potential for Spectra Energy (NYSE: SE), the firm’s general partner, to drop down assets to the MLP. The general partner is spending upward of $1 billion a year on new energy infrastructure, excluding acquisitions. The Spectra Energy family is especially well-positioned to build out its assets in the Southeast, where utilities continue to increase the role of natural gas in their fuel mix.

Management won’t show its hand until a deal ready. In the meantime, Spectra Energy Partners LP–the lone Conservative Portfolio holding that trades below our buy target–rates a buy up to 33.

What’s Ahead

Here are the confirmed and expected reporting dates for Portfolio holdings that have yet to release quarterly results. We’ll share our quick take on quarterly earnings in brief Flash Alerts, followed by an in-depth review in the February issue of MLP Profits.

DCP Midstream Partners LP (NYSE: DPM)–Feb. 24 (estimated)
Energy Transfer Partners LP (NYSE: ETP)–Feb. 15 (confirmed)
Genesis Energy LP (NYSE: GEL)–Feb. 16 (confirmed)
Legacy Reserves LP (NSDQ: LGCY)–Feb. 21 (confirmed)
Linn Energy LLC (NSDQ: LINE)–Feb. 23 (confirmed)
Penn Virginia Resource Partners LP (NYSE: PVR)–Feb. 20 (confirmed)
Regency Energy Partners LP (NYSE: RGP)–Feb. 15 (confirmed)
Targa Resources Partners LP (NYSE: NGLS)–Feb. 23 (confirmed)
Teekay LNG Partners LP (NYSE: TGP)–Feb. 24 (estimated)
Vanguard Natural Resources LLC (NYSE: VNR)–March 1 (confirmed)

The following Portfolio holdings have reported their fourth-quarter and full-year results. Here’s where to find information and analysis. Note that Inergy Midstream’s results are for its fiscal first quarter ended Dec. 31, 2011.

Enterprise Products Partners LP (NYSE: EPD)–Feb. 8 Flash Alert
Inergy Midstream LP (NYSE: NRGM)–Kicking the Tires
Kinder Morgan Energy Partners LP (NYSE: KMP)–Crunching the Numbers
Magellan Midstream Partners LP (NYSE: MMP)–Feb. 8 Flash Alert
Navios Maritime Partners LP (NYSE: NMM)–Crunching the Numbers
Spectra Energy Partners LP (NYSE: SEP)–Feb. 8 Flash Alert
Sunoco Logistics Partners LP (NYSE: SXL)–Crunching the Numbers