Stock Analysis & Ideas

Here’s Why Enbridge (NYSE: ENB) Stock Could Emerge as a Winner

Story Highlights

Enbridge has the potential to keep generating promising returns on the back of solid organic growth, strong business utilization, and impressive operational performance. Let’s learn more about the company.

Canadian energy infrastructure company Enbridge Inc. (TSE: ENB) (NYSE: ENB) has been making significant strides on the back of rising energy demand and strong operational performance. The company has also been maintaining a low-risk business model on the back of long-term contracts that guarantee stable cash flows in any economic cycle.

Further, the dual-strategy of focusing on conventional pipelines and making investments in low-carbon opportunities is keeping the company well on the growth path.

Enbridge Looks Unstoppable

This year, Enbridge has invested $4.5 billion in newly sanctioned growth projects. This includes $3.6 billion of new projects, involving an expansion of its B.C. Pipeline System, along with an investment in the Woodfibre LNG facility. 

The company’s investment in B.C. Pipeline System should strongly benefit its top line, given the solid natural gas demand and increasing exports. Also, the investment in Woodfibre LNG facility meets the company’s low-risk pipeline-utility commercial model and is expected to generate attractive returns.

To boost its U.S. Gulf Coast export position, Enbridge has successfully concluded a joint venture merger deal with Phillips 66 to assume operations of the Gray Oak oil pipeline. Gray Oak is already working with Enbridge’s Ingleside Energy Center (EIEC) to deliver Permian Basin oil to local Gulf Coast and worldwide export markets.

Enbridge sees the deal to aid the company in leveraging long-term growth opportunities in the space, as it expects the Permian oil supply to increase by nearly two million barrels per day through 2030.

The company’s secured growth backlog has touched $13 billion, with capital investments required between 2022 and 2026. Enbridge’s focus on a solid balance sheet, consistent dividend growth, attractive organic growth, and share repurchases increases its investment appeal.  

Analysts Are Cautiously Optimistic but Bloggers Are Bullish about ENB’s Prospects

According to TipRanks, analysts are cautious but optimistic about Enbridge. The stock has a Moderate Buy consensus rating, which is based on four Buys and three Holds. ENB’s average price target of $60.90 mirrors 8.7% upside potential.

Financial bloggers are 95% Bullish on ENB, compared to the sector average of 67%. Further, Enbridge scores a ‘Perfect 10’ on TipRanks, indicating that it has strong potential to outperform the market. Shares of Enbridge have surged 22.9% in the past year.

Final Thoughts

The impressive underlying fundamentals, strong business utilizations, effective dual-strategy, and a healthy operational performance should keep Enbridge on the growth path, thereby increasing the investment appeal of its stock.

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