5-Star Stocks Poised to Pop: Energy Transfer Partners

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, natural gas transporter Energy Transfer Partners (NYSE: ETP  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Energy Transfer's business and see what CAPS investors are saying about the stock right now.

Energy Transfer facts

Headquarters (founded)

Dallas, Texas (2002)

Market Cap

$7.52 billion

Industry

Oil and gas storage and transportation

TTM Revenue

$8.28 billion

Management

Chairman/CEO Kelcy Warren
President/COO Marshall McCrea, III

Revenue and EPS Growth Rate (over last five years)

63.5% and 31.8%

Dividend Yield

7.9%

Competitors

Enterprise Products Partners (NYSE: EPD  )
Enbridge Energy Partners (NYSE: EEP  )

CAPS members bullish on ETP also bullish on:

General Electric (NYSE: GE  )
Johnson & Johnson (NYSE: JNJ  )

CAPS members bearish on ETP also bearish on:

Citigroup (NYSE: C  )
Starbucks (Nasdaq: SBUX  )

Sources: Capital IQ (a division of Standard & Poor's), and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 607 of the 618 members who have rated Energy Transfer -- 98% -- believe the stock will outperform the S&P 500 going forward. These bulls include jawilde and TrojanFan.

Last month, jawilde tapped the stock as a natural way to make some income:

Natural gas will become increasingly important under the Obama administration as a way to reduce our carbon footprint. [Energy Transfer] is pipeline company which transports natural gas and gets paid regardless of [natural gas'] price. Given the ~ 8% yield and beaten down stock price, [Energy Transfer] should outperform the S&P on a Total Return basis.

In a pitch from last week, TrojanFan transfers even more of that bullish energy:

What an incredible investment. That is a hefty and consistently rising yield. ...

Our reliance on natural gas as a nation is only going to grow and these guys don't have any real exploration risk as they are earning profits on the transmission. As long as the gas is flowing then they're making money. ...

I'm pretty involved in direct investing in natural gas partnerships, too, and let me tell you, they are in all the right regions of the country, blanketing the big shale plays all over Texas. That is where all the big growth in gas production is coming from over the next 5-10 years.

What do you think about Energy Transfer, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Enterprise Products Partners and Johnson & Johnson are Motley Fool Income Investor picks. Starbucks is a selection of Stock Advisor and Inside Value, and the Fool owns shares of it. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (1) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 29, 2009, at 11:20 AM, weiwentg wrote:

    Potential investors should note that while ETP gets paid based on volume of gas transported as opposed to the price of natural gas, the latter does have at least some influence on the former. Nonetheless, I think that natural gas volumes are for sure not going to go down.

    Potential investors should also note the existence of Energy Transfer Equity (ETE), the general partner of ETP. GPs have incentive distribution rights, which basically entitle them to an increasing amount of the LP's total distributions over time. This acts as a leveraged bet on the LP's performance. ETE is definitely more risky than ETP, but EPE will be able to grow its distributions much faster than ETP. All else equal, a GP should have a lower yield than its LP, but ETE is selling very near ETP's yield. I think ETP's underlying performance is stable, and I'd buy ETE under about $27-28.

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