CA - Enbridge: The Goldilocks Stock With Catalysts

2024-04-26 10:00:00 ET

Summary

• Enbridge has underperformed compared to other midstream companies, but offers a high dividend yield of 7.5-8.0%.
• The company's high debt levels are a concern, but the CEO has reassured investors about its credit rating.
• Near-term catalysts for growth are limited, but medium-term opportunities in the Permian Basin and LNG exports could drive future growth.
• We rate ENB as a strong buy at current prices.

Introduction

Enbridge ( ENB ) has been our favorite major midstream company for some time now. We last covered the company with a Buy rating in January 2024, and it's waffled since, dropping about 5%. In fact, a comparison reveals that, among a midstream cohort that includes some of the largest midstreamers, ENB has performed on a total return basis at the very bottom. Way at the bottom. Ouch. We have paid a price for avoiding MLPs (ENB is a C-Corp), but as an IRA is my primary investment vehicle, K-1's are just not an option....

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