The Top 5 Midstream Companies

I'm a firm believer in the efficacy of lists. At worst, they're thought-provoking and help me stay organized. At best, someone else makes them for me. Today's list comes from energy consultancy PFC Energy. I'm using the company's list of the top 15 midstream companies to begin to evaluate this energy subsector's dominant players.

The top 5
PFC organizes its list by market cap, and it's a great way to take a snapshot of the biggest players in the industry. Let's take a quick look at last year's growth and this year's progress:

Rank

Company

2011 Share-Price
Change YOY

Share-Price
Change YTD

1 Enterprise Products Partners (NYSE: EPD  ) 11% 11%
2 TransCanada (NYSE: TRP  ) 15% (0.14)%
3 Enbridge (NYSE: ENB  ) 32% 7%
4 KinderMorgan (NYSE: KMI  ) 21% 8%
5 El Paso 93% 12%

Source: PFC Energy and Y! Charts.

Right off the bat, El Paso's growth story needs to be addressed. Though it's a large and successful company, 2011's share-price jump is due mostly to Kinder Morgan's acquisition bid. That deal is expected to close later this month.

Leader of the pack
Though it boasts the lowest year-over-year growth on this list, Enterprise Products Partners stands out for its consistent performance in 2012. The company has quickly become one of my favorite stocks this year. The company beat analyst estimates on both revenue and earnings per share for the first quarter, reporting $11.25 billion and $0.73, respectively.

The energy industry will spend an estimated $130 billion to $210 billion expanding natural gas infrastructure alone over the next 20 years, and Enterprise is going to be a key player in that development. The company has secured commitments for its ATEX Express pipeline, which will carry ethane from the Marcellus shale to the Gulf Coast. It is also expanding a crucial crude oil facility in Houston.

Runners-up
Canadian giants TransCanada and Enbridge are suffering mightily from opposition to several of their key projects right now. There is potential light at the end of the tunnel for both companies, however. TransCanada has recently reapplied for permission to build its Keystone XL pipeline, after changing its controversial route through Nebraska. An approval would likely jolt its share price out of the doldrums.

As for Enbridge, the company, along with partner Enterprise, plans to reverse the flow of its Seaway pipeline this June. The reversal will allow crude to flow from Cushing, Okla., down to Gulf Coast refineries.

The sixth man
After the Kinder Morgan/El Paso merger closes and the latter ceases to exist, Williams Cos. (NYSE: WMB  ) will likely move into the fifth spot. In 2011, the company posted 29% growth in its share price year over year. It is up nearly 24% so far this year, and reported solid first-quarter results.

Foolish takeaway
Lists are everywhere these days, and when they come from reputable sources like trade magazines and industry journals, they often provide a great beginning for investment research. Keep tabs on the best of the biggest -- click here to add the companies above to My Watchlist.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.

Motley Fool newsletter services have recommended buying shares of Enterprise Products Partners and TransCanada. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Related Tickers

4/16/2014 12:31 PM
ENB $46.66 Up +0.48 +1.04%
Enbridge, Inc. (US… CAPS Rating: *****
EPD $73.25 Up +0.79 +1.09%
Enterprise Product… CAPS Rating: *****
KMI $33.21 Up +0.31 +0.95%
Kinder Morgan CAPS Rating: *****
TRP $46.63 Up +0.25 +0.54%
TransCanada CAPS Rating: ****
WMB $41.24 Up +0.54 +1.33%
Williams Companies… CAPS Rating: ****

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