Since the beginning of the year, the stock market has faced the brunt of macroeconomic and geopolitical issues. The Dow Jones Industrial Average has declined 12.2% year-to-date to close the last trading session at 31,874.84, while the S&P 500 and Nasdaq Composite have lost 16.9% and 23.9% year-to-date to close the last trading session at 3,959.90 and 11,897.65, respectively.
The Federal Reserve has been trying to contain the surging inflation by aggressively increasing the benchmark interest rates, giving rise to recession fears. With the increasing odds of a recession, investors must keep looking for quality stocks yet to get enough investor attention but possess solid upside potential.
We think Enterprise Products Partners L.P. (EPD) and Delek Logistics Partners, LP (DKL) could survive the market uncertainties and deliver solid returns based on their strong fundamentals and growth prospects. So, these stocks could be good additions to one’s portfolio now.
Enterprise Products Partners L.P. (EPD)
EPD provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products in North America. The company’s segments include NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services.
On February 17, 2022, EPD announced that it had completed the previously announced acquisition of Navitas Midstream Partners, LLC. The acquisition gives EPD a foothold for natural gas gathering, treating, and processing in the Midland Basin of the Permian.
EPD’s net cash flow from operating activities increased 6% year-over-year to $2.14 billion for the first quarter ended March 31, 2022. The company’s adjusted EBITDA increased 0.4% year-over-year to $2.25 billion. In addition, its revenue increased 42% year-over-year to $13 billion.
Analysts expect EPD’s EPS and revenue for the quarter ended June 30, 2022, to increase 22% and 63.7% year-over-year to $0.61 and $12.44 billion, respectively. It surpassed Street EPS estimates in three of the trailing four quarters. The stock has gained 16.4% year-to-date to close the last trading session at $25.58.
EPD’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Momentum and Sentiment and a B for Value. It is ranked #9 out of 34 stocks in the A-rated MLPs – Oil & Gas industry. Click here to see the other ratings of EPD for Growth, Stability, and Quality.
Delek Logistics Partners, LP (DKL)
DKL owns and operates logistics and marketing assets for crude oil and intermediate and refined products in the United States. It operates through three segments: Pipelines and Transportation, Wholesale Marketing and Terminalling, and Investment in Pipeline Joint Ventures.
On June 1, 2022, DKL closed its previously announced acquisition of 3Bear Delaware Holding – NM, LLC, an indirect subsidiary of 3Bear Energy, LLC.
DKL’s Chairman, President, and CEO, Uzi Yemin, said, “This acquisition substantially increases our third-party revenue at DKL, as per our stated goals, and allows DKL to become a more diversified and less sponsor-dependent entity. Additionally, 3Bear expands our product mix to natural gas and water, which will prove useful to customers within our legacy Permian gathering business.”
DKL’s net revenues increased 35% year-over-year to $206.58 million for the first quarter ended March 31, 2022. The company’s net income attributable increased 8.9% year-over-year to $39.51 million. Also, its EPS came in at $0.91, representing an increase of 9.6% year-over-year to $0.91.
For the quarter ending September 30, 2022, DKL’s EPS and revenue are expected to increase 40% and 74.1% year-over-year to $1.40 and $247.24 million, respectively. Over the past year, it has gained 24.9% to close the last trading session at $50.02.
DKL’s POWR Ratings reflect solid prospects. The company has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Momentum and a B grade for Quality. Within the MLPs – Oil & Gas industry, it is ranked #10. To see the other ratings of DKL for Growth, Value, Stability, and Sentiment, click here.
EPD shares were trading at $25.29 per share on Thursday morning, down $0.29 (-1.13%). Year-to-date, EPD has gained 19.53%, versus a -16.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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