Investors who are eyeing Energy Transfer (NYSE: ET) are likely drawn to its impressive high yield, currently at approximately 7.9%. With a quarterly distribution of $0.32 per share and a projected annual increase of 3% to 5%, the company certainly seems appealing on that front alone. But what if I told you that there’s potential for Energy Transfer’s stock to nearly double in value over the next five years?
At Extreme Investor Network, we believe that Energy Transfer, as one of the largest midstream companies in the U.S., has a multitude of growth opportunities in its pipeline. With its extensive integrated system that spans the nation, the company is involved in various aspects of the midstream sector, including transporting, storing, and processing different hydrocarbons throughout its network. This robust infrastructure places Energy Transfer in a favorable position for expansion projects.
In the upcoming year, Energy Transfer is planning to allocate between $3 billion to $3.2 billion in growth capital expenditures for new projects. Looking ahead, if the company continues to invest an average of $3 billion annually in growth capex, it could witness a significant increase in adjusted EBITDA from $15.5 billion in 2024 to about $17.4 billion in 2029.
Furthermore, Energy Transfer currently trades at a conservative multiple of 8x on a forward enterprise value-to-adjusted EBITDA basis, positioning it as one of the most attractively priced stocks among its MLP midstream peers. Historically, MLP midstream stocks have commanded a higher EV/EBITDA multiple, averaging around 13.7x between 2011 and 2016. As the demand for natural gas rises due to factors like AI and electric vehicle demand, there’s a strong case for these stocks to warrant a higher valuation in the future.
Considering these growth opportunities and factors contributing to potential multiple expansion, we see Energy Transfer’s stock potentially hitting $30 by 2029 if it can command a 10x EV/EBITDA multiple. Even without a significant multiple expansion, the stock presents solid investment potential with consistent distributions and reasonable price appreciation.
At Extreme Investor Network, we believe that Energy Transfer’s strategic positioning, growth initiatives, and attractive valuation make it a compelling investment opportunity for those seeking long-term growth potential in the energy sector. By leveraging our expert insights and analysis, investors can make informed decisions to potentially capitalize on the growth trajectory of companies like Energy Transfer.
Invest in the future with Extreme Investor Network, where financial expertise meets investment opportunities that offer the potential for significant returns.