Enterprise in sweet spot of energy market

This MLP offers rising dividends and capital gains supported by strong earnings growth.

By TheStockAdvisors Apr 3, 2013 10:06AM

Natural gas plant Kevin Burke CorbisBy Mark Skousen, Forecasts & Strategies


Enterprise Products Partners (EPD), based in Houston, it is the country's largest master limited partnership.


Enterprise gathers natural gas from wellheads from the Rockies to the offshore Gulf of Mexico. Enterprise operates gas processing plants and provides storage and fractionation for natural gas liquids to the petrochemical industry.


By creating a pipeline network for the transportation of domestic oil and gas -- including Bakken oil -- Enterprise Products is in the sweet spot of the new energy bull market.


Export capacity almost doubled from 4 million barrels per month to 7.5 million barrels per month at its propane export terminal in Texas. Capacity could grow to 10 million barrels per month by 2015.


Enterprise is in a privileged position to benefit from increasing demand for natural gas liquids over the next years. For example, it's developing a new 270-mile pipeline header system that will deliver ethane to petrochemical plants in the U.S. Gulf Coast region.


Financially, steadily increasing distributions and capital gains supported by strong earnings growth make a powerful case for Enterprise Products. Last year, the company achieved record net income, earnings per share and distributable cash flow.


Investors often complain about the complex tax aspects of master limited partnerships, but from Enterprise's viewpoint, MLPs are a positive.


Enterprise doesn't pay taxes at the corporate level, and this situation lowers its cost of capital in comparison to its incorporated peers.


Yielding 4.5%, Enterprise looks well positioned to deliver increasing revenues and distributions. It has outperformed its peers in the past five-, three- and one-year periods, with the highest earnings and dividend growth.


It is already ahead 20% this year, but usually moves higher before its earnings report (April 30). We continue to recommend purchase.


More from TheStockAdvisors.com

Tags: EPDoil
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
265
265 rated 2
429
429 rated 3
612
612 rated 4
499
499 rated 5
525
525 rated 6
701
701 rated 7
533
533 rated 8
337
337 rated 9
131
131 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.