While many young investors may avoid oil and all fossil fuel stocks, the reality is that the future of electric vehicles is just that: in the future. Sure, there’s that family in your neighborhood with an electric vehicle, but the power grid is far from capable of handling an all-electric future. With energy companies out of favor with the current administration, most have turned away from production and into equity ownership.
Commodity strategists at Goldman Sachs now expect Brent, currently trading near $91 a barrel, to hit $105 this year. If geopolitical hotspots (specifically, the war in Ukraine) ignite, it could get there quickly and natural gas prices could also explode higher. President Biden recently said the Nord Stream 2 pipeline would not go ahead if Russia invades Ukraine, which could send natural gas prices skyrocketing.
With major energy companies focusing on capital discipline, debt reduction and shareholder return rather than production, prices are indeed poised to rise, possibly much more. With the stock prices of most major integrated oil companies having soared, we looked for companies that support oil and natural gas infrastructure and whose shares still have some margin.
We found five rated buy reviews from major Wall Street firms that now look like solid plays. It is important to remember that no single analyst report should be used as the sole basis for any buy or sell decision.
Enterprise Product Partners
It is the largest publicly traded energy partnership and a major North American provider of midstream energy services to producers and consumers. Enterprise Products Partners LP (NYSE:EPD) services include natural gas gathering, processing, transportation and storage, natural gas liquids (NGL) fractionation, import and export terminal and offshore production platform services.
One of the reasons many analysts may like the stock could be its payout coverage ratio. This ratio is well over 1x, which makes it relatively less risky among Master Limited Partnerships (MLPs).