Energy Transfer Is Your Perfect AI Bet

(10min)

Summary

  • Energy Transfer offers an undervalued AI play, with its vast natural gas infrastructure poised to power energy-hungry data centers, despite recent stock underperformance versus the S&P 500.
  • Q1 FY2025 showed resilient financials: adjusted EBITDA rose 5.1% YoY to $4.1 billion, and distributable cash flow (DCF) remained strong at $2.3 billion, supporting unitholder payouts.
  • ET is targeting ~150 Texas data centers, with significant announcements anticipated soon, leveraging existing infrastructure for low-cost, quick revenue generation from AI's surging power needs.
  • Beyond AI, the Lake Charles LNG project nears FID, with secured international agreements promising diversified growth and bolstering ET's long-term distributable cash flow prospects.
  • Despite commodity and regulatory risks, ET's attractive valuation, strong fee-based contracts, and clear AI growth trajectory support a reiterated "Buy" rating for long-term investors.

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My Coverage History

So far, I've written 2 articles on Energy Transfer LP Common Units (NYSE:ET), both with a "Buy rating. My first one came out in early November 2024, calling to buy the stock

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This article was written by

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Oakoff Investments is a personal portfolio manager and a quantitative research analyst with 5 years helping readers find a reasonable balance between growth and value by sharing proprietary Wall Street information.

He leads the investing group Beyond the Wall Investing with features that include: a fundamentals-based portfolio, weekly analysis on insights from institutional investors, regular alerts for short-term trade ideas based on technical signals, ticker feedback by request from readers, and community chat. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ET either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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