The Alerian MLP index surged 6 percent in the year’s final two weeks to bring its gain on the year to 20.5 percent, and more than 26 percent in total return counting index members’ distributions.

That’s about what the Dow Jones Industrial Average gained in 2013 before considering its own 2 percent dividend yield, and not far off the 30 percent rally by the S&P 500.

Distributions not included

All’s well that ends well? Perhaps not. By most ways of measuring cash flow against the value of both equity and debt, MLPs remain seriously overpriced relative to their corporate income tax paying counterparts. I’ve touched on the main reasons here before. They include the by now widely known (and therefore largely priced in) story about the big growth opportunities created by the US shale drilling boom, as well as the general dearth of tax-shielded income plays, which has sent investors who once bought CDs and bonds scrambling for higher-yielding alternatives.

This reservoir of excess valuation will gradually drain in two ways. First, the lure of higher earnings multiples accorded MLPs will keep a steady stream  of C-corps lining up to spin off assets into new MLP offshoots. That will continue  to increase the supply of such assets. Meanwhile, if interest rates normalize over the next few years as they should, many investors may rediscover the charm of investing in federal, state and municipal bonds, potentially limiting demand for MLPs.

Which is not to suggest that MLPs will lose their allure overnight. But a decade of returns far in excess of what stocks have managed is bound to catch up to the asset class sooner or later, and may well be the silent culprit in the weakness we have seen in recent months, before those last two weeks of window dressing.

It feels odd to grow incrementally more bearish after a year like the one MLP Profits has just enjoyed, one in which our portfolio returns topped those of MLPs as a whole by some 50 percent. This month’s In Focus breaks down those numbers. But there’s nothing unnatural in investors jumping onto a particular bandwagon after it’s already rolled most of the way uphill, valuations be damned.

Yet valuations should matter a great deal if the current income thrown off by MLPs is a luxury rather than a necessity. They’re the reason I don’t currently hold a single MLP in the retirement accounts  I manage for relatives. This is not a matter of concerns about tax efficiency or of the threat of the unrelated business income tax on the retirement accounts. Rather, it’s an outgrowth of the fact that in every industry and business line, including pipelines, MLPs seem to offer less cash flow for the investing buck than income-tax-paying corporations.

Does my current boycott of MLPs in personal investing choices diminish my credibility the way it would for a chef who wouldn’t eat his own cooking? I’d argue that it should boost it instead, because I’m clearly not promising the moon.

MLP investors always have their reasons, be they income generation, tax deferral or the ample growth opportunities still evident in the midstream sector. My job isn’t to round up the MLPs that are better than all other choices; only the MLPs that will do better than other MLPs.

By that standard, Atlas Resource Partners (NYSE: ARP), the fast-growing gas driller recently brought to my attention by a reader, looks attractive. My initial response was that there are much cheaper gas producers out there growing just as fast. But among MLPs, ARP is unusual in offering a double-digit yield alongside excellent odds that the distribution will increase at a double-digit rate this year. A recent dimming of its 2014 distribution forecast has the units on sale, at a price not much below that at which billionaire investor Leon Cooperman has recently been scooping them up. For more on Atlas Resource Partners, see Best Buys.

This month’s Portfolio Update takes a look at another MLP insider who’s recently added to his discounted holdings, as well as Regency’s holiday shopping spree.

The Sector Spotlight follows last month’s look at the takeaway options in the Bakken with a survey of the shale play’s major players in gathering and processing.