Enbridge Inc (USA) (ENB), TransCanada Corporation (USA) (TRP): The Future Looks Bleak for Keystone XL

Page 1 of 2

Less than a month after the British Columbia government rejected an Enbridge Inc (USA) (NYSE:ENB) pipeline proposal, TransCanada Corporation (USA) (NYSE:TRP)‘s Keystone XL pipeline hopes also appear squashed.

Enbridge Inc (USA) (NYSE:ENB)

On June 25, President Barack Obama said the pipeline would only extend from Alberta to Texas if it “doesn’t significantly exacerbate the problem of carbon pollution.”

That casts serious doubts on TransCanada Corporation (USA) (NYSE:TRP)’s ability to extend the major project from Canada to southern United States. However, the State Department still has a say about whether the project will go through, and their report is expected to determine whether the project would benefit America.

However, the President’s speech cast serious doubts on TransCanada Corporation (USA) (NYSE:TRP)’s ability to execute the pipeline, and that should have shareholders concerned. The pipeline extension would cost about CAD$7.6 billion, and the firm is counting on the project for major revenue expansion.

TransCanada is a mixed bag

Now that the XL Keystone pipeline looks to be a dead duck, those holding out to see what will happen before buying the stock should somewhere else for their investment. And those who are invested in the stock with the hopes that the major project gets the green light should pull out, and many most certainly will. That means it could take a while for the share price to recover. However, the company has other projects on the go that could generate CAD$12 billion in 2015, and CAD$50 billion in total. Part of that revenue includes the Bruce Power nuclear plant in Ontario. That project could generate up to 25% of the province’s electricity.

The growth expectations at TransCanada Corporation (USA) (NYSE:TRP) are moderate. Compared to the industry’s average 21 P/E ratio, TransCanada Corporation (USA) (NYSE:TRP) is at 21. Analysts believe the company will have a PE ratio of 18.2 going forward, according to RBC Direct Investing.

Enbridge faces its own challenges

Late in May, the B.C. government opposed Enbridge Inc (USA) (NYSE:ENB)’s proposal to run a 730-mile pipeline to the B.C. coast from oil-rich Alberta. More recently, on June 25, protesters set up at Enbridge Inc (USA) (NYSE:ENB)’s North Westover pump in Hamilton, Ontario. They said they will stay there as long as they can in order to speak out against a flow reversal at the pipeline. This type of revolt could lower shares.

While Enbridge Inc (USA) (NYSE:ENB) looks relatively strong with the number of projects on the go, it might only see a fraction of those come to fruition. Furthermore, the firm has a low profit margin of 2.9%. Also, the firm has nearly 59% debt to total capital, which is a lot of leveraging. In fact, it is one of the most highly leveraged companies in the natural gas utilities industry. That’s enough to make me stay away from this firm.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

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!