Enterprise Products Partners' Pullback Is An Opportunity As The AI Energy Wave Builds

2026-06-03 04:35:06 ET

Enterprise Products Partners ( EPD ) just printed one of its strongest quarters in years, and its unit price has declined after breaking out to $40. If you were just watching the chart, you may be under the assumption that something was wrong, but what actually happened is that oil fell roughly -19% in May. The market grew optimistic that a U.S.-Iran ceasefire would reopen the Strait of Hormuz, and EPD got dragged down with the broader energy complex. There are some investors who are treating EPD as a leveraged bet on the war premium, which is the wrong way to think about this business, in my opinion, because the gap between how the market is pricing the units and what the company actually is produces alpha for investors. The recent dip is the market discounting something transient, which was a geopolitical spread bump that was always going to fade. EPD is a durable energy infrastructure company with an earnings engine that is tied to fee-based volume growth feeding a multi-decade wave of natural gas and NGL demand from AI data centers, LNG, and petrochemicals. EPD has a growing distribution that is yielding around 6% and is covered by its distributable cash flow (DCF) and backed by one of the best balance sheets in the sector. I think that many investors are not looking at the energy infrastructure sector because they are considered boring income plays, but I am looking at EPD as a heavy asset company with an infrastructure moat that is next to impossible to replace....

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