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U.S. Oil Industry's Biggest Winners? Pipeline Builders

Stocks in this article: TRP ENB OKE HES EEP STO CLR

3. Enbridge (ENB)

Company profile: Enbridge, with a market value of $32 billion, is a major player in the transportation and distribution of crude oil and natural gas throughout North America.

The company's Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids and refined products pipelines and terminals. Through its limited partnership ( Enbridge Energy Partners (EEP)), it operates the U.S. portion of the Lakehead pipeline system, the world's longest crude pipeline, which stretches 3,300 miles from the Canadian oil fields in Alberta to Chicago, points east, and is currently expanding its pipelines toward the Gulf Coast. The company has several other smaller crude pipelines in the U.S. as well as a sizable natural gas gathering and processing business.

Dividend yield: 2.73%

Investor takeaway: Its shares are down 7% this year, but have a three-year, average annual return of 17%. Analysts give its shares five "buy" ratings, one "buy/hold," and 11 "holds," according to a survey of analysts by S&P.

Morningstar analyst David McColl writes that "while its main rival, TransCanada, has been seeking approval of the Keystone XL pipeline, Enbridge has taken some of TransCanada's thunder with its 50% acquisition of the Seaway Pipeline, which competes with TransCanada's Gulf Coast Pipeline that runs from Cushing (Okla.) to the Gulf Coast and was originally part of the proposed Keystone pipeline system." He also notes that Enbridge's assets produce "steady cash flows with little sensitivity to volumes or commodity prices."

2. TransCanada Corp. (TRP)

Company profile: TransCanada, with a market value of $32 billion, is is among the largest pipeline operators in North America, owning more than 35,000 miles of natural gas pipelines.

Dividend yield: 3.89%

Investor takeaway: Its shares are up 6.4% this year and have a three-year, average annual return of 19%. Analysts give its shares two "buy" ratings, four "buy/holds," nine "holds," and one "weak hold," according to a survey of analysts by S&P.

S&P has it rated "buy," with a $49 price target. It's currently at $45.60.

1. Oneok (OKE)

Company profile: Oneok, with a market value of $9 billion, processes, transports and distributes natural gas and natural-gas liquids across the country. The company owns 47.7%, including the general stake and incentive distribution rights, of pipeline master limited partnership Oneok Partners.

Dividend yield: 2.74%

Investor takeaway: Its shares are up 5% this year and have a three-year, average annual return of 39%. Analysts give its shares four "buy" ratings, four "buy/holds," and five "holds," according to a survey of analysts by S&P.

S&P has it rated "strong buy," with a $50 price target. Tanjila Shafi, an S&P Capital equity analyst who covers the industry, said in a research note last week that the company has earmarked $3.6 billion to $4.2 billion for projects in the Bakken shale region. Those projects include the $450 million to $550 million Bakken Pipeline project, a 525-mile pipeline connecting natural gas liquids gathering systems in the Bakken to the interstate pipeline system. It is also building three natural gas processing plants in the region and the Bakken Crude Express Pipeline, a 1,300-mile pipeline transporting oil produced in the Bakken to the U.S. oil distribution hub in Cushing, Okla.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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