3 Energy Stocks You May Be Overlooking

Crestwood Equity Partners (NYSE: CEQP), Oasis Midstream Partners (NYSE: OMP), and Hess Midstream Partners (NYSE: HESM) are far from household names. Because of that, most investors probably missed the fact that these high-yielding master limited partnerships (MLPs) have been red-hot this year. However, while all have delivered strong returns in 2018, each one still has plenty of fuel left in the tank to continue providing outsized gains in the coming years, which is why investors won't want to keep overlooking the potential of these pipeline companies.

Just hitting the turning point

Crestwood Equity Partners has been on fire this year, gaining nearly 55% due to clear signs that the once-struggling MLP is not only back on solid ground but about to deliver accelerated growth. Driving that view is the company's backlog of high return expansion projects that it expects will fuel a more than 15% compound annual growth rate in earnings and cash flow over the next three years. These projects include several new natural gas processing plant expansions as well as the continued buildout of its oil and gas gathering systems across several fast-growing shale regions in the U.S.

While Crestwood has delivered a strong performance this year, the company still has plenty of fuel left in the tank to reward investors in the future. That's because units of the MLP remain undervalued compared to those of its peers when factoring in the growth it has coming down the pipeline. At the moment, Crestwood sells for just 10 times its estimated EV/EBITDA for 2019, which is well below the forecast 12.2 times average of its peer group and the second lowest valuation in its class. When you add the upside potential from the continued narrowing of that valuation gap to the company's rock-solid 6%-yielding dividend, Crestwood could continue delivering high-octane returns for investors.

Just getting started

Units of Oasis Midstream have rocketed more than 33% in 2018, which is the MLP's first full year as a public company. Fueling that market-crushing return has been the more than 50% increase in the MLP's earnings over the past year, driven by a big-time uptick in volumes of oil, natural gas, and water flowing through its gathering systems. That growth has allowed Oasis Midstream to increase its distribution to investors by a 20% annualized rate in the last year so that it now yields more than 7%.

However, the company's fast-paced growth over the past year is only the beginning. Oasis is currently investing in several projects to support the growth of its oil-producing sponsor as well as third-party customers. These expansions position it to deliver 20% annual distribution growth through at least 2021. That growth has the potential to keep fueling massive returns for investors, which is why they won't want to overlook its upside.

Plenty of growth still up ahead

Hess Midstream Partners has enjoyed a strong year, delivering a gain of nearly 20%. Driving the pipeline company's return has been a big uptick in the volumes flowing through its pipelines, processing plants, and storage terminals, which have come in higher than expected thanks to rising oil prices. That better-than-anticipated growth enabled the company to boost its cash flow guidance range from $87 million-$92 million up to $91 million-$96 million. It also allowed Hess Midstream Partners to increase its distribution to investors by 15% over the past year so that it now yields 5.9%.

Hess Midstream believes it can continue delivering strong cash flow growth in the future. Due to the expected volume growth of its oil-producing parent, the company estimates that it can generate enough cash flow to continue increasing its payout at a 15% annual rate over the next several years. That highly visible growth makes Hess Midstream a company that income seekers won't want to miss.

More upside coming down the pipeline

While Crestwood Equity, Hess Midstream, and Oasis Midstream have all delivered strong gains this year, that doesn't mean investors have completely missed out on the upside. That's because all three have clearly visible growth still ahead. With that combination of upside potential and high yields, this trio of MLPs could continue to deliver market-beating returns in the coming years.

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Matthew DiLallo owns shares of Crestwood Equity Partners LP. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.