Energy Transfer LP (NYSE:ET) is one of the best value stocks in Goldman Sachs’ portfolio. Energy Transfer is one of the largest and most diversified midstream operators in North America, with an extensive portfolio spanning natural gas, NGLs, crude oil, and refined products. The stock is a strong Buy as per the consensus of analysts, which still indicates more than 34% potential upside, and recent analyst views have been suggesting an optimistic outlook. In fact, on September 11 and 18, analysts from UBS ...

Core Viewpoint - The article discusses the renewed focus on "Made in America" as a significant investment theme, driven by geopolitical tensions and a push for domestic manufacturing and energy independence [2]. Group 1: Companies Highlighted - Cleveland-Cliffs Inc. is North America's largest flat-rolled steel producer, operating fully integrated steelmaking facilities in the U.S. and supplying steel to various domestic sectors [5][6]. - Newell Brands Inc. produces iconic American household products and maintains substantial U.S. manufacturing despite some global sourcing. The company is focusing on streamlining operations and has a forecasted 19% earnings growth in the next 12 months [10][11]. - Energy Transfer LP operates over 125,000 miles of pipelines for transporting crude oil and natural gas, positioning itself as a key player in U.S. energy security. The stock has a consensus price target of $22.64, indicating a 26% upside potential [13][15]. Group 2: Stock Performance and Market Indicators - Cleveland-Cliffs stock is trading around $8.71, showing a strong rebound and surpassing key moving averages, with a potential upside target of $10 [7][8]. - Newell Brands stock has seen a decline of over 40% in 2025 but has recently increased by about 17% in the last 30 days, nearing its 100-day moving average [12]. - Energy Transfer stock is currently at $17.91, just below its 100-day moving average, with analysts predicting a bullish trend and a dividend yield of 7.31% [16].

Core Insights - Enbridge has become one of the largest publicly traded energy companies with a market cap exceeding $100 billion and offers a dividend yield of nearly 6% [1] - The company possesses significant competitive advantages, including the longest pipeline network in North America [2] - Enbridge transports approximately 90% of Canada's crude oil exports to the U.S. and about 40% of all crude oil produced in North America, making it a dominant player in the industry [3] Competitive Advantages - Pipelines are the most cost-effective and efficient method for transporting hydrocarbons over land, which enhances Enbridge's infrastructure value [4] - The high upfront costs and lengthy permitting processes for pipeline construction create barriers to entry, allowing Enbridge to enjoy high cash flow once projects are operational [5] - Due to increasing regulations, some of Enbridge's pipelines may face little to no competition in the future [5] Market Considerations - There are potential headwinds for hydrocarbon demand due to climate change and pollution concerns, which could impact Enbridge's revenue model that charges by volume [6] - Despite these challenges, Enbridge remains a viable investment for two main reasons: its substantial dividend yield and stability during bear markets [8][10] Investment Rationale - The company offers a dividend yield of 5.8%, with a history of consistent increases, supported by its toll-like business model that generates strong cash flows [8][9] - Enbridge's stock tends to be less volatile during bear markets, with a beta of around 0.87, indicating relative stability [10] - While the long-term demand for hydrocarbons may be uncertain, Enbridge is still suitable for retirees seeking income and investors looking to preserve capital [11]

Dividend Program - Enbridge offers a forward dividend yield of 6.09%, maintaining a yield above 6% for most of the last four years [2] - The company has increased its dividend for 30 consecutive years, a notable achievement among energy stocks [2][3] Financial Stability - Enbridge's distributable cash flow payout ratio is between 60% and 70%, indicating strong financial flexibility to sustain and grow dividends [3] - The company operates over 18,000 miles of crude oil pipelines and 72,500 miles of natural gas pipelines, contributing to its stable revenue [4] - Enbridge is the largest natural gas utility in North America by volume and has renewable energy projects with a total capacity of over 6.6 gigawatts [5] Cash Flow and Earnings Protection - Enbridge generates cash flow from over 200 asset streams, with more than 98% of its EBITDA protected by regulatory agreements or take-or-pay frameworks [6] - Over 80% of EBITDA is safeguarded from inflation through built-in escalators or regulatory paths, with less than 1% linked to commodity prices [6] Balance Sheet Strength - The company's debt-to-EBITDA ratio is between 4 and 5, which is considered manageable, and it holds investment-grade credit ratings [7] - Enbridge's CEO stated that any business development deals will be neutral or better for the balance sheet, indicating a cautious approach to growth [7] Growth Prospects - Enbridge expects to grow its business by approximately 5% per year through the end of the decade, which is favorable for future dividend increases [9] - The company has a secured growth backlog of $28 billion and plans to invest between $8 billion and $9 billion annually in capital projects [10] - Additional funds of $1 billion to $2 billion will be available for new strategic projects or mergers and acquisitions [10]

Financial Data and Key Metrics Changes - Kinetic reported first quarter adjusted EBITDA of $250 million, a 7% year-over-year increase driven by process gas volume growth and margin expansion in the Midstream Logistics segment [7][14] - Distributable cash flow was $157 million, and free cash flow reached $120 million [14] - The company affirmed full-year adjusted EBITDA guidance of $1.09 billion to $1.15 billion, expecting a meaningful acceleration in adjusted EBITDA growth during the second half of the year [16][17] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated adjusted EBITDA of $159 million, up 11% year-over-year due to increased process gas volumes and margin expansion from Northern Delaware assets [14] - The Pipeline Transportation segment reported adjusted EBITDA of $94 million, down 2% year-over-year, primarily due to the absence of contributions from Gulf Coast Express following the sale of equity interest [16] Market Data and Key Metrics Changes - Kinetic's operations are primarily focused on the Permian Basin, which is expected to remain resilient despite macroeconomic challenges [9][10] - The company anticipates over 1 billion cubic feet per day of gas growth per year, even if Permian crude production remains flat [10] Company Strategy and Development Direction - Kinetic is focused on providing flow assurance and operational reliability to producer customers, with a strong emphasis on organic and inorganic growth opportunities [10][12] - The company announced a $500 million share repurchase program, reflecting management's confidence in Kinetic's value proposition [13][21] - Future capital expenditures are expected to be discretionary and flexible, with less than $50 million of committed growth capital in 2026 [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged elevated volatility and macroeconomic uncertainty but expressed confidence in Kinetic's ability to navigate these challenges [7][20] - The company is seeing some indirect impacts of lower commodity prices, leading to adjustments in gas process volume growth assumptions from approximately 20% to high teens growth [18][19] - Management remains optimistic about the long-term growth outlook, projecting a 10% compound annual growth rate through 2029 [23][26] Other Important Information - Kinetic has made substantial progress on strategic projects, including the commissioning of the King's Landing complex [7][19] - The company has a strong hedging strategy, with approximately 83% of expected gross profit sourced from fixed fee agreements [17][18] Q&A Session Summary Question: Long-term growth drivers - Management highlighted that the 10% compound annual growth rate is supported by contractual resets and growth in New Mexico, with a focus on operational efficiency [23][26] Question: Capital allocation and buybacks - Management confirmed a flexible approach to capital allocation, emphasizing the value seen in the current share price and the potential for M&A opportunities [28][30] Question: Macro environment and CapEx adjustments - Management indicated that further production cuts could lead to adjustments in capital expenditures, but emphasized a customer-specific approach to decision-making [49][52] Question: Commodity exposure and hedging - Management stated that approximately 83% of gross profit is fee-based, with plans to continue hedging against commodity price fluctuations [61][63] Question: Performance of acquired assets - The Barilla Draw acquisition has exceeded expectations, with significant activity anticipated in the coming years [105][106]

Financial Data and Key Metrics Changes - Kinetic reported adjusted EBITDA of $250 million for Q1 2025, a 7% increase year-over-year driven by process gas volume growth and margin expansion in the Midstream Logistics segment [6][14] - Distributable cash flow was $157 million, and free cash flow was $120 million for the quarter [14] - The company affirmed full-year adjusted EBITDA guidance of $1.09 billion to $1.15 billion, expecting a meaningful acceleration in growth during the second half of the year [15][16] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated adjusted EBITDA of $159 million, up 11% year-over-year due to increased processed gas volumes and margin expansion from Northern Delaware assets [14] - The Pipeline Transportation segment reported adjusted EBITDA of $94 million, down 2% year-over-year, primarily due to the absence of contributions from Gulf Coast Express following its sale [15] Market Data and Key Metrics Changes - Kinetic's operations are primarily focused on the Permian Basin, which is expected to remain resilient despite macroeconomic challenges [8][10] - The company anticipates over 1 billion cubic feet per day of gas growth per year, even if Permian crude production remains flat [10] Company Strategy and Development Direction - Kinetic is focused on providing flow assurance and operational reliability to producer customers, with a strong emphasis on organic and inorganic growth opportunities [10][12] - The company announced a $500 million share repurchase program, reflecting confidence in its value proposition and commitment to returning capital to shareholders [6][13] - Kinetic is taking a measured approach to future spending, with less than $50 million of committed growth capital in 2026, allowing flexibility in investment decisions [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning to navigate macroeconomic uncertainties, highlighting a strong free cash flow profile and industry-leading earnings growth outlook [11][19] - The management noted that while commodity prices have declined, 83% of expected gross profit for 2025 is sourced from fixed fee agreements, providing stability [16][17] Other Important Information - Kinetic has made substantial progress on strategic projects, including the commissioning of the King's Landing complex, expected to unlock over 100 million cubic feet per day of currently curtailed volumes [16][19] - The company is also exploring behind-the-meter power generation opportunities, which could optimize costs and enhance operational efficiency [10][110] Q&A Session Summary Question: Long-term growth drivers - Management indicated that the company expects to maintain a 10% compound annual growth rate (CAGR) through 2029, driven by contractual resets and growth in New Mexico [21][24] Question: Capital allocation and buybacks - Management confirmed a flexible approach to capital allocation, emphasizing the value seen in the current share price and the potential for M&A opportunities [27][30] Question: Macro environment and CapEx adjustments - Management acknowledged uncertainty in the macro environment but indicated that they are seeing yellow lights rather than red, allowing for cautious progress on large infrastructure projects [54][55] Question: Commodity exposure and hedging - Management stated that approximately 83% of gross profit is fee-based, with only 15% directly tied to commodity prices, indicating a strong hedging strategy [61][62] Question: Performance of Barilla Draw assets - Management reported that the Barilla Draw acquisition has exceeded expectations, with significant activity anticipated in the coming years [105][106]

Financial Data and Key Metrics Changes - South Bow generated normalized EBITDA of $1.09 billion and distributable cash flow of $608 million in 2024 [13] - The company expects to generate normalized EBITDA of $1.01 billion in 2025, reflecting a range of 3% [15] - The net debt to normalized EBITDA ratio is forecasted to be approximately 4.8% by the end of 2025 [16] Business Line Data and Key Metrics Changes - 90% of normalized EBITDA is secured through committed arrangements, minimizing commodity price or volumetric risk [14] - The marketing segment is expected to see a reduction of approximately $30 million year-over-year due to reduced activity and certain unwinds of positions [99] Market Data and Key Metrics Changes - There is significant demand for uncommitted capacity on Keystone and continued strength in demand for capacity on the U.S. Gulf Coast segment [14] - The company has observed extreme demand in the Gulf Coast for heavy barrels out of Canada, indicating strong supply and demand fundamentals [24] Company Strategy and Development Direction - South Bow aims to leverage existing infrastructure to deliver high returns for shareholders, with a focus on capital allocation priorities and risk management [10] - The company is committed to maintaining a sustainable dividend while strengthening its investment-grade financial position [10][17] - Future growth will be pursued within risk preferences, with a focus on optimizing existing corridors and enhancing contracted strategies [12][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position entering 2025 and the ability to meet near-term deleveraging targets [16] - The ongoing uncertainty around tariffs may create headwinds for uncommitted capacity, but the company believes it can manage risks within its guidance [29] Other Important Information - The company received approval from PHMSA to lift pressure restrictions on a segment of the Keystone system, which is expected to improve operational efficiency [96] - The variable toll complaint process is ongoing, with decisions awaited from both Canadian and U.S. regulatory bodies [78] Q&A Session Summary Question: Discussion on open season and interest levels - Management noted that Western Canadian sedimentary basin has been egress constrained for years, but there is encouragement from both supply and demand fundamentals [22][24] Question: Changes in long-term debt-to-EBITDA target - Management confirmed a focus on deleveraging to reach a target of four times by 2028, emphasizing the importance of maintaining a strong balance sheet [26] Question: Guidance on tariffs and downside risks - Management indicated that 90% of EBITDA is contracted, allowing for stability despite market uncertainties, and they believe they can manage risks within a 3% range [28][29] Question: Future growth opportunities and recapitalized optionality - Management highlighted the importance of leveraging existing infrastructure and optimizing capital investments to support growth [39][40] Question: Marketing strategy and market conditions - Management is shifting towards a more contracted marketing strategy to mitigate volatility and improve shareholder value [71][106] Question: PHMSA approval impact on capacity - Management stated that the approval will enhance operational efficiency but did not provide specific throughput increases at this time [97] Question: Long-term EBITDA growth outlook - Management expressed confidence in achieving a 2% to 3% growth rate, driven by increased delivery points and capturing additional volumes [87][106]