We are upbeat about Enterprise Products Partners LP’s (EPD - Free Report) prospects and believe it is a promising pick right now.
The partnership currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities for investors.
Let’s delve deeper to analyze the factors that make this midstream energy player an attractive investment option.
Enterprise Products is among the leading midstream energy infrastructure providers. The partnership owns pipeline networks, spreading across 49,200 miles and carrying natural gas, oil, natural gas liquids and petrochemicals.
The pipelines connect consumers of the commodities with all prolific shale resources in the United States, providing the partnership with steady fee-based revenues under long-term contracts. Importantly, the partnership’s pipeline networks enable 90% of the refineries in the East of Rockies to gain access to crude volumes from key North American shale plays.
Since its IPO in 1998, Enterprise Products has completed $26 billion of key acquisitions. The partnership is also constructing $5 billion worth of growth capital projects which ensure additional fee-based revenues for the partnership in the coming years.
Moreover, Enterprise Products has strong financials with good credit ratings. Importantly, the partnership’s fee-oriented growth projects position it to enjoy above-average growth pace in distributable cash flows (DCF) over the next two years, expanding its distribution coverage ratio (currently 1.7X). After raising distributions over the past 20 years, the partnership is planning to hike payments by 2.3% through 2019. It has also announced $2-billion-unit buyback programs to return more capital to unitholders.
Other Stocks to Consider
Other prospective players in the energy space are Apache Corp. (APA - Free Report) , Ecopetrol S.A. (EC - Free Report) and Anadarko Petroleum Corp. . Apache and Anadarko carry a Zacks Rank #2 while Ecopetrol sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Apache has average positive earnings surprise of 6.6% for the last four quarters.
Ecopetrol is likely to witness earnings growth of 25.3% through 2019.
Anadarko Petroleum has average positive earnings surprise of 6.6% for the last four quarters.
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