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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
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Enbridge Inc. (ENB - Free Report) has witnessed upward earnings estimate revisions for 2022 and 2023, respectively, in the past 30 days.
Factors Favoring the Stock
Currently carrying a Zacks Rank #3 (Hold), Enbridge has an extensive network of pipeline assets responsible for transporting roughly 30% of North American crude oil production. The midstream properties are also responsible for carrying as much as 20% of the natural gas Americans consume. Through its Gas Distribution and Storage operations, Enbridge has delivered roughly 2 trillion cubic feet of natural gas, thereby serving 75% of Ontarians.
With a significant portion of its assets being contracted by shippers for the long term, its business model is less exposed to volatility in oil and gas prices. Underpinned by long-term contracts, Enbridge’s business model also has considerably lower volume risk exposure.
Enbridge has estimated roughly C$17 billion in secured growth capital projects, of which C$4 billion will likely be in service this year. Thus, the company is ensuring more cashflows in the coming years.
Risks
Compared to composite stocks belonging to the industry, Enbridge’s balance sheet has more debt exposure.
Line 5 is a critical infrastructure responsible for supplying 55% of the propane demand in Michigan. A few years back, the company entered into agreements with the state to construct a tunnel that would encase a replacement section of the Line 5 oil pipeline to enhance safety. However, repeated protests for shutting down the line on safety concerns could affect Enbridge.
To make its operations more stable, Phillips 66 is giving more attention to midstream (pipelines), renewables and chemicals businesses. It also has strong refining operations.
Precision Drilling is a well-known name in the energy space for offering its clients access to an extensive fleet of Super Series drilling rigs. Its services also include offering well service rigs. With high commodity prices, demand for PDS’ drilling rigs is favorable.
NexTier Oilfield Solutionsis also a well-known U.S. land oilfield service player. With higher exploration and production by upstream companies, demand for NexTier Oilfield’s diverse set of well completion and production services is handsome.
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Here's Why Hold Strategy is Apt for Enbridge (ENB) Stock Now
Enbridge Inc. (ENB - Free Report) has witnessed upward earnings estimate revisions for 2022 and 2023, respectively, in the past 30 days.
Factors Favoring the Stock
Currently carrying a Zacks Rank #3 (Hold), Enbridge has an extensive network of pipeline assets responsible for transporting roughly 30% of North American crude oil production. The midstream properties are also responsible for carrying as much as 20% of the natural gas Americans consume. Through its Gas Distribution and Storage operations, Enbridge has delivered roughly 2 trillion cubic feet of natural gas, thereby serving 75% of Ontarians.
With a significant portion of its assets being contracted by shippers for the long term, its business model is less exposed to volatility in oil and gas prices. Underpinned by long-term contracts, Enbridge’s business model also has considerably lower volume risk exposure.
Enbridge has estimated roughly C$17 billion in secured growth capital projects, of which C$4 billion will likely be in service this year. Thus, the company is ensuring more cashflows in the coming years.
Risks
Compared to composite stocks belonging to the industry, Enbridge’s balance sheet has more debt exposure.
Line 5 is a critical infrastructure responsible for supplying 55% of the propane demand in Michigan. A few years back, the company entered into agreements with the state to construct a tunnel that would encase a replacement section of the Line 5 oil pipeline to enhance safety. However, repeated protests for shutting down the line on safety concerns could affect Enbridge.
Stocks to Consider
A few better-ranked stocks in the energy space are Phillips 66 (PSX - Free Report) , Precision Drilling Corporation (PDS - Free Report) and NexTier Oilfield Solutions Inc. . All the stocks carry a Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
To make its operations more stable, Phillips 66 is giving more attention to midstream (pipelines), renewables and chemicals businesses. It also has strong refining operations.
Precision Drilling is a well-known name in the energy space for offering its clients access to an extensive fleet of Super Series drilling rigs. Its services also include offering well service rigs. With high commodity prices, demand for PDS’ drilling rigs is favorable.
NexTier Oilfield Solutionsis also a well-known U.S. land oilfield service player. With higher exploration and production by upstream companies, demand for NexTier Oilfield’s diverse set of well completion and production services is handsome.