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EUROPE’S ENERGY CRISIS IS KEEPING ENERGY PRICES HIGH
America leads the world in oil and gas production. We believe midstream energy infrastructure offers predictable cash flows to investors.
Midstream’s Goldilocks Phase
The word of the week is re-rating. Both Wells Fargo and Morgan Stanley have suggested that, notwithstanding this year’s 50%+ return in midstream energy infrastructure, further upside is possible. They posit that a re-rating of the sector would not be unreasonable given the strong fundamentals. Enterprise Value/EBITDA (EV/EBITDA) is a widely used valuation metric, although […]
Pipelines Are Cheap; Stocks Are Not
Market strategists often point out that valuations aren’t a good timing tool, but it’s still worth staying on top of whether the market is cheap or not. Stocks were having a good year leading into the election, and the Republican sweep took the market another leg higher. Residents of Naples, FL, our winter home, are […]
An Energy Secretary With Relevant Experience
Sitting next to me at Newark airport on Monday while I waited to board an airplane was an FT reporter. I know this because he made a phone call to discuss the Trump appointments “on background” with a source who, based on one side of the conversation, had recently been in Mar-a-Lago. Chris Wright, Trump’s […]
Pipeline Real Yields Are High
When investors ask what return they should expect from an investment in midstream, we typically suggest dividends plus growth plus buybacks. Dividend yields are around 5%. Wells Fargo is forecasting 4% dividend growth next year, and buybacks of around 2% of market cap. 5% + 4% + 2% suggests an 11% total return, assuming no […]
The Pro-Energy Election
As the market absorbed last week’s election results, energy was the clear winner. On the week, midstream infrastructure returned +8.4% while the S&P500 was +4.7%. The main driver of outperformance is the expectation of a regulatory regime not beholden to climate extremists. The pause on LNG export permits will be lifted. Although many expected this […]