Better Buy: Magellan Midstream Partners vs. Enterprise Products Partners L.P.
The energy industry took it on the chin in 2020 thanks to the coronavirus pandemic. The pain extended into the midstream sector, with even conservative players like Magellan Midstream Partners (NYSE: MMP) and Enterprise Products Partners (NYSE: EPD) seeing huge price declines -- each was off around 30% for the year.
If you're a more aggressive investor, however, you should see this as a buying opportunity -- but only if you tread carefully.
The biggest issue in 2020 was the pandemic. For the energy sector, like many other sectors, the real fallout was driven by the government-mandated economic shutdowns and social distancing efforts used to slow the spread of the coronavirus. Demand for oil and natural gas effectively declined dramatically at a time when supply was already elevated. Demand still hasn't fully recovered and, compounding things, excess oil has piled up in storage. Although U.S. stockpiles of crude have fallen around 8% from their July 2020 peak, according to the U.S. Energy Information Administration, they remain 3% above where they were at the start of 2020. Working inventories down is a slow process and that stored energy needs to be worked off before the market can get back to more normal supply/demand dynamics.
Source Fool.com
