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Here's Why We Should Bet on Enterprise Products Right Now

Zacks Equity Research

We are upbeat about Enterprise Products Partners LP’s EPD prospects and believe it is a promising pick right now.

The partnership currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.        

Let’s take a look at the other factors that make this midstream energy service provider an attractive bet.

Stable Fee-Based Revenues

Enterprise Products is among the largest midstream service providers in North America. The partnership’s pipeline network spreads across roughly 49,200 miles and transports natural gas, oil, natural gas liquid, petrochemicals and refined petroleum products. Notably, through the network of pipelines, the partnership connects consumers of the commodities with most of the prolific shale plays in the United States. Notably, almost 90% of the refineries in the East of Rockies are connected to producers through the Enterprise Products’ midstream infrastructure.

The diverse midstream assets, which are currently under long-term contracts, will continue to provide the partnership with stable fee-based revenues.

Organic Projects

Since its IPO in 1998, Enterprise Products has invested a hefty sum of $26 billion on major acquisitions.  The partnership has spent another $42 billion for its organic growth projects that has been contributing to cashflow.  

The partnership is also well positioned to generate additional cashflow from growth capital projects of $6 billion that are currently under construction.

Growing Export Volumes

With ownership in 18 docks, the partnership is well positioned to capitalize on growing production volumes of NGLs and oil in the United States that will serve the mounting need for commodities in both domestic and international markets.

Other Stocks to Consider

Other prospective players in the energy space are World Fuel Services Corporation INT, Delek Logistics Partners, L.P. DKL and TC PipeLines, LP TCP. All the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.     

World Fuel beat the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 16.4%.

Delek Logistics is likely to see earnings growth of 4.9% through 2019.

TC PipeLines has an average positive earnings surprise of 12.6% for the past four quarters.

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TC PipeLines, LP (TCP) : Free Stock Analysis Report
Delek Logistics Partners, L.P. (DKL) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
World Fuel Services Corporation (INT) : Free Stock Analysis Report
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