7 Core Growth Stocks for Your Portfolio – Enbridge Inc (USA) (ENB)

Page 1 of 2

Investors can prime their portfolio for success by building on a collection of core growth stocks. These are wonderful businesses with both a sustainable competitive advantage and a long growth runway. Enbridge Inc (USA) (NYSE:ENB) is one of the few companies that meet both of those requirements.

Why it’s a core stock

Enbridge Inc (USA) (NYSE:ENB) moves energy. These are the guys who ship energy from the wellhead to the refinery and into your home. The company operates Canada’s largest transportation network with over 15,000 miles in pipelines and is responsible for exporting two thirds of Western Canada’s crude oil production.

But what was once a stable industry is now in the midst of a major expansion. According to the IEA, North American energy production is expected to grow by 3.9 million barrels per day (b/d) between 2012 and 2018. The surprise upswing is the result of double-digit growth from the Alberta oil sands, North Dakota Bakken, and Texas Eagle Ford.

But here’s the problem: There isn’t enough pipe to move all of this oil from wellhead to market. Across the continent, oil is log-jammed at terminals and the situation is getting worse.

Enbridge Inc (USA) (NYSE:ENB) is the solution to this problem. Over the next four years the company has secured $28 billion in new expansion projects and is projected to grow earnings 10% annually into the later part of the decade. This is a secular trend that won’t disappear the next time congress debates the debt ceiling or a sour European debt auction roils the markets.

But the real benefit of investing in a pipeline company like Enbridge Inc (USA) (NYSE:ENB) are the tall barriers to enter the business. Once you have a pipe in the ground you essentially have a monopoly. This is a highly regulated industry which makes it prohibitively expensive for new competitors to enter the market.

This means two thing for shareholders: big returns and juicy dividends. Enbridge Inc (USA) (NYSE:ENB) has paid a dividend for 60 consecutive years and has grown its payout 12.3% annually over the last decade.

Risks to watch out for

Of course as with any good investment, there’s always a number of risks that investors have to be on the look out for.

Politics: Political gridlock is a huge obstacle to the industry’s growth. TransCanada Corporation (USA) (NYSE:TRP)’s Keystone XL pipeline illustrates this problem perfectly. If approved, Keystone would transport 830,000 b/d of Alberta crude oil to refineries on the Gulf coast. However, the project faces stiff resistance from environmentalists and Keystone still requires approval from the U.S. State Department.

But recently we’ve seen encouraging signs. In June, U.S. President Barack Obama declared that he would reject any project that has a ‘net’ negative effect on the environment. Many analysts see this as a ‘wink and a nod’ to the industry that Keystone will be approved. This is good news for all pipeline companies.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!