Want Stability? These 2 Energy Stocks Are as Safe as They Come
Oil and natural gas prices are high today thanks to a supply/demand imbalance and geopolitical concerns. That's led to a rally in energy stocks. Only the energy sector has a long history of swinging between euphoria and pessimism, so today's upturn will likely turn into a downturn before too long. If you are looking to add some energy exposure, these two energy names are among the safest options. Here's why.
Midstream master limited partnership (MLP) Enterprise Products Partners (NYSE: EPD) owns one of the largest portfolios of energy pipeline, storage, processing, and transportation assets in North America. With a roughly $50 billion market cap, it easily competes with the midstream industry's largest players and has the scale and heft to both grow from the ground up and act as an industry consolidator. And it has one of the strongest balance sheets in the industry, so it is conservatively managed, as well. That's highlighted by the fact that its cash flows covered its distribution by a massive 1.8 times in the first quarter.
The midstream sector, notably, is driven by fees. So not only is Enterprise large and financially strong, but its cash flows don't tend to rise and fall along with the price of the commodities it helps to transport around the world. Demand, which is still quite strong, is the more important factor. Simply put, if you are looking for a safe energy investment, you'll want to take a close look at Enterprise and its well-covered distribution.
Source Fool.com
