3 Oil Pipeline MLP Stocks to Watch Despite Industry Headwinds

Industry Overview - The Zacks Oil and Gas - Pipeline MLP industry consists of master limited partnerships that primarily transport oil, natural gas, refined petroleum products, and natural gas liquids in North America, generating stable fee-based revenues from transportation and storage assets [3] - The industry is currently facing a gloomy outlook due to conservative spending by exploration and production companies, which is expected to reduce demand for transportation and storage assets [1][6] Financial Metrics - The industry has a high debt-to-capitalization ratio of 55.7%, indicating that borrowing is common for financing large infrastructure projects, but this elevated leverage may limit financial flexibility [4] - The current trailing 12-month enterprise value-to-EBITDA (EV/EBITDA) ratio for the industry is 10.49X, which is lower than the S&P 500's 18.55X but higher than the sector's 5.26X [14] Market Performance - The Zacks Oil and Gas - Pipeline MLP industry has underperformed compared to the broader Zacks Oil - Energy sector and the S&P 500 over the past year, declining by 4.3% while the sector gained 7.6% and the S&P 500 rose by 17.8% [10] Future Challenges - The industry is expected to face challenges from a shift to renewable energy, which may reduce the demand for pipeline and storage networks for oil and natural gas [5] - Oil and gas exploration and production companies are under pressure to prioritize stockholder returns over production growth, which is negatively impacting the demand for pipeline and storage assets [6] Notable Companies - Delek US Holdings, Inc. is positioned to benefit from its refining business, with expected growth of almost 40% in 2025 [18] - Energy Transfer LP has a stable business model with a vast pipeline network and is projected to see earnings growth of 7% this year [19] - Plains All American Pipeline LP also enjoys stable fee-based revenues and has seen upward earnings estimate revisions for 2025 [22]