Enbridge Daily Stock Roundup
The expected merger between Enbridge and Spectra Energy was completed, and this saw the company enter the market as a powerhouse. The deal sees Enbridge rise to greater heights putting it as the current North America’s largest energy infrastructure company. The company’s stock is currently among the best midstream picks in the stock arena thanks to the strong yield, significant growth opportunities and the favorable risk-reward for long-term investors. Not only does Enbridge’s stock have a favorable risk reward, but a synergy potential that could be revised upwards if commodities ever deviate from their temperamental trading is in the offing. The combined company’s prospects are bright.
Enbridge Capital gains potential: The stock has been on a downward trend to a $40/ share from the previous $44/ share in late January, but interesting activity is being observed, the averages are taking shape, and an upward trend is expected sooner rather than later. The 50 EMA records a downward trend while the 200 DMA is recording a slightly upward trend that is sloping but trending towards flat. An extension of this is expected as crude oil continues to decline. Natural gas has recorded an uptrend, but this is yet to reflect in the current trading. Enbridge continues to trade about $15 shy, 37.5% down from its early highs in 2015 and about 40% off of its late 2014 highs. Annualized returns could be observed in the medium term before 13-20% dividends. The trend will continue to feature prominently provided the stock continues to decent upwards, and commodity pricing gains a foothold. The total potential returns in a year could be between 17-24%, factoring in dividends and the current 4.4% yields. Interest is that the returns are nearly guaranteed to beat the broader equity market’s return.
Pacing between commodity indexes and Enbridge is off as it usually is with most stocks. This though is skewed in favor of investors. Crude is expected to work its way back to late 2014/early 2015 levels sooner rather than later, and this could see the stock more than double. The safety of a substantial growth profile and a 4% yield affords investors the time to see this realized.
Synergy potential: The integration of spectra and Enbridge will see synergies come online and this will no doubt have an effect on future financial reports. Currently, the prediction stands at $40 million in annual synergies by 2019. It is also said that the synergies are going to help Enbridge perform well on earnings and it should, therefore, be reasonable to expect a consistent uptrend as 2019 is approached.
Long-term risk reward: Enbridge has missed EPS expectations on earnings in the past. It has had a rather low average move of 1.69%, but if it makes good of its chance, it can start generating a trend of beat earnings each quarter. The beat earnings will see shareholders take home an extra 6.5- 7% every year.
