The plunge in natural gas prices has hurt natural gas and related energy support plays, but just look on that as a buy opportunity, given natural gas's likely large role in the U.S.'s energy future.Hence, I'm Reiterating my Buy rating for Enterprise Products Partners (NYSE: EPD), first recommended on April 29, 2009 at a price of $24.24.
Enterprise Products Partners is an integrated provider of natural gas pipeline and processing services and natural gas liquids fractionation, storage, transportation and terminal services. EPD also is a major developer of midstream infrastructure in the deepwater of the Gulf of Mexico.
In general, expect rising pipeline volume to generate good things for EPD: rising earnings and impressive cash flow. Enterprise has a large portfolio of projects that hold substantial promise, with only modest risk. The likely star? The Independence Hub/Pipeline, on which production commenced in 2007. The First Call FY2009/FY2010 EPS estimates for EPD are $1.61 to $1.85.
Stock Analysis: Enterprise Products Partners is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in EPD now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your EPD position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $12.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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