What happened

The shares of giant diversified Canadian midstream company TransCanada Corporation (TRP 2.00%) rose an impressive 19% in January, according to data provided by S&P Global Market Intelligence. That was a huge turn from last year, when the S&P 500 Index's late-year swoon helped to push TransCanada's stock down a painful 26%. For reference, the S&P was down around 6% in 2018 and rose roughly 8% in January.

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There was a similar trend for smaller midstream player Phillips 66 Partners LP (PSXP). It was down 19% in 2018 and rose 16% in January. But the trend didn't hold for Sunoco LP (SUN -0.04%), which distributes gasoline. This limited partnership was off by 4% in 2018, two percentage points less than the broader market, and up 12% in January. Cheniere Energy Partners LP (CQP 0.67%) and Cheniere Energy Inc. (LNG 1.94%) were even further from the pack, up 12% and 11%, respectively, in January after posting gains of 21% and roughly 10%, respectively, in 2018.

So what

Without a doubt, the broader market had a big impact on the price movements of all of these midstream entities. In late 2018 investors shifted into a risk-off mind-set and pushed just about everything lower. That shifted as 2019 got underway, with investors again willing to take on risk in January. But when you step back from this group of midstream players, you can see that painting them all with the same brush doesn't make much sense. The performance disparities are the evidence that seals this deal.

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Take, for example, Cheniere Energy Partners and Cheniere Energy, the clear standouts here. These two are front and center in the effort to export U.S. natural gas. Cheniere Energy Partners owns and operates Sabine Pass, one of the first liquified natural gas (LNG) export facilities to get up and running in the United States. It started operations in late 2016, ramping up the facility through 2017 and 2018. Revenues have basically exploded higher after years of spending to build the Sabine Pass LNG export facility.     

Cheniere Energy Partners has more capacity expansion plans on the books, as well. And virtually all of its cash flow is backed by long-term contracts. Things are looking pretty good for this partnership and that remains true no matter what happens to the broader market. Which is where general partner Cheniere Energy comes in. It is benefiting along with its controlled limited partnership, but to a lesser degree because it is also building an LNG export facility in Corpus Christi, Texas. That's a big expense, but if it plays out as well as the Sabine Pass investment, Cheniere Energy will eventually see huge cash flows backed by long-term contracts.

That said, things are getting exciting for the company's Texas project, with the first cargo shipped in December 2018. More of the facility will come on line later in 2019, as well, with further expansion slated for 2021 or so. It's easy to see, however, that investors have looked past the market's ups and downs with both Cheniere Energy Partners and its parent, Cheniere Energy, because of solid financial results that look likely to continue improving. The individual stories beat out the big-picture market moves. 

In the middle here is Sunoco LP, which is a bit of an oddball in the midstream partnership space. After some big changes in 2018, its core business, essentially, delivers gasoline to gas stations. It also owns around 940 gas stations that it leases to third parties. Although gas prices go up and down, that doesn't change the need for a station to receive fuel deliveries. Moreover, a big portion of Sunoco's business is tied to delivery, not gasoline prices. Cash flows should be materially more stable in the future than they have been in the past. And, it is actively expanding its gas distribution business via acquisitions, as well as reaching into the midstream space to increase diversification. To that end, it completed a refined terminal purchase in late December and a gas station acquisition in mid-January. This is an evolving and increasingly compelling story, and investors have taken note.   

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Which leads to the two laggards of 2018 and leaders in January, TransCanada and Phillips 66 Partners. Although TransCanada is a much larger entity, these are both more typical midstream players, owning pipelines and other similar assets. This pair tracked more closely with similarly diversified midstream players on both the downside and the upside.

The biggest news out of TransCanada was the company's desire to change its name to TC Energy. Phillips 66 Partners upped its distribution by 5.4% in late January, continuing its streak of quarterly increases that has been in place since 2013. The hike was about the same size as the previous increase. All in all, there wasn't anything major on the news front here or any particularly unique characteristic about their businesses to differentiate them within the midstream space, unlike the situations at the two Cheniere entities and Sunoco.   

Check out the latest Cheniere Energy and Sunoco earnings call transcripts.

Now what

The stock market is a fickle beast and can have a huge impact on the prices of individual securities. But not all companies are made the same, and that can lead to very different outcomes, even during broad market moves like the late 2018 swoon and swift January recovery. This collection of midstream players is proof of just how important it is to understand the unique nature of each investment in your portfolio -- as well as the need to monitor the big picture.