Beating the Street — This Play is a Buy Now
Dear Wealth Watch Reader,
One of my favorite energy stocks reported quarterly results two weeks ago and they were spectacular.
Now could be the perfect time to scoop up shares. I explain why below.
This Energy Play Walloped Expectations
Energy Transfer Partners (NYSE: ETP) reported quarterly results two weeks ago and they were spectacular.
For the three months ending Dec. 31, 2017, ETP reported net income of $1.10 billion, according to Yahoo Finance.
But a more important metric for master limited partnerships, or MLPs, is distributable cash flow (DCF). Business Wire notes, for the quarter ETP generated $1.2 billion of DCF.
A whopping $240 million increase over the same period last year.
ETP’s stock popped on those strong results, but what impressed me even more is how good its future looks thanks to regulatory approval on a new pipeline project.
The other week, the Federal Energy Regulatory Commission gave ETP the green light for its Ohio portion of the Rover pipeline project.
As you know, oil/gas pipeline projects draw a lot of environmental attention these days. Getting through the regulatory process to open a new one is no small feat.
ETP owns the 713-mile Rover pipeline, which crosses Ohio, Michigan, Pennsylvania and West Virginia. It has the capacity to transport 3.25 billion cubic feet of natural gas per day.
ETP expects its pipeline to go into full service by the end of March, according to Natural Gas Intel Daily.
Don’t underestimate the impact of this approval on ETP’s future profits.
A Yahoo Finance report notes, shortly after Trump took office he approved the controversial Dakota Access pipeline and ETP’s profits more than quadrupled to $2.5 billion last year.
Source: Bloomberg, Yahoo Finance
The Dakota Access pipeline — halted by the Obama administration — added an impressive $247 million to earnings in the fourth quarter alone.
The question then is, how much impact will the Rover pipeline have on profits?
The Dakota Access pipeline transports 500,000 barrels of oil a day. In comparison, the 3.25 billion cubic feet of natural gas is equivalent to 570,000 barrels of oil, according to ETP’s website.
The Rover pipeline pencils out to be a bigger deal than the Dakota Access pipeline.
That means 2018 should be bigger, better and more profitable for ETP.
If you don’t own ETP shares, now could be a great time to enter this play.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
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