Energy plays a vital role in the U.S. economy, and we can expect to see a considerable increase in demand for it in the coming years. The surge in demand for energy isn't just about keeping the lights on; it's about fueling the innovative algorithms and advanced technological processes that define the industries of tomorrow.
The push for U.S. energy independence has become a key focus for the Trump administration. For investors looking to capitalize on this growing energy demand, here are three compelling stocks to consider today.
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Enterprise Products Partners provides steady income
Enterprise Products Partners (EPD -0.28%) owns and operates over 50,000 miles of pipelines and 300 million barrels (MMBbls) of liquid storage capacity, giving it expansive infrastructure across North America. Its midstream energy platform links oil and gas producers and customers throughout the U.S., Canada, and some offshore basins.
As a midstream master limited partnership (MLP), the company's business model is designed for stability, thanks to its contractual agreements and steady demand for its services. Approximately 90% of its contracts include an escalation provision to mitigate the impact of inflation on cash flow and distributions. Additionally, due to the importance of energy in our everyday lives, demand for its pipeline services is relatively inelastic.
Another positive is that Enterprise Products Partners has grown its distribution for 26 consecutive years and has returned $58 billion to unit holders since its IPO in 1998. Given its stable, fee-based model and growth in domestic oil and gas production, Enterprise is a solid stock for investors, especially those seeking income.
Constellation Energy's massive nuclear fleet positions it well long-term
Constellation Energy (CEG 1.02%) is a major player in the nuclear industry and is well-positioned for growth as sentiment around nuclear power shifts. The company has positioned itself as the largest nuclear operator in the United States today, with a nuclear fleet comprising 22 gigawatts (GW) of capacity.
It's been an eventful year for Constellation Energy, which has entered into 20-year power purchase agreements with both Meta Platforms and Microsoft to help power their growing data centers. It was also awarded a $1 billion contract from the U.S. General Services Administration. Part of this includes one 10-year, $840 million contract to supply the GSA with over 1 million megawatt-hours (MWhs) of power annually, beginning this year.
Earlier this year, it also announced an agreement to acquire Calpine for $26.6 billion, inclusive of debt. The company sees the acquisition as being transformative, creating the nation's leading competitive retail electric supplier and combining Constellation's nuclear fleet with Calpine's natural gas and geothermal assets.
The acquisition of natural gas and geothermal assets enhances Constellation's diverse portfolio, which already includes nuclear, hydro, wind, and solar energy sources, thereby creating a more diversified generation fleet. This expanded portfolio, combined with existing clean energy and uprate opportunities, positions Constellation to meet the increasing demand from data centers and artificial intelligence (AI), making it an energy stock that is an appealing one to hold long term.
Bloom Energy's fuel systems can help companies meet demand needs today
Bloom Energy (BE 2.36%) provides fuel cell systems that can offer on-site, low-carbon power. Its core product, the Bloom Energy Server, is based on its proprietary solid oxide technology that converts fuel into electricity without combustion. These systems are designed to be on-site solutions, offering reduced operating costs and lower greenhouse gas emissions compared to conventional fuels.
Bloom's on-site, fully islanded microgrid solutions enable customers, particularly data centers, to bypass lengthy interconnection queues and avoid the need for costly upgrades to their transmission and distribution systems. This means Bloom can deploy power in a matter of months, rather than years, and meet today's growing energy demands sooner.
Morgan Stanley estimates that the U.S. power grid will face a shortfall of up to 42 gigawatts by 2028, and views Bloom's solid oxide fuel cell technology as a key AI enabler and one of the pivotal solutions to help address this shortfall. The company needs to continue securing and deploying projects as it demonstrates its ability to provide on-site power within a few short months.
Given its potential role in meeting energy needs in the medium term, I believe Bloom Energy is an excellent investment opportunity with solid long-term upside.
