During the episode aired on September 28, Cramer mentioned Enterprise Products Partners L.P. (NYSE:EPD), as he was highlighting the disruptions and operational bottlenecks plaguing infrastructure in the Gulf. He remarked:
And I like the nat-gas liquids business, which is just crushing it in America because all the problems in the Gulf. It’s Enterprise Product Partners, EPD, which I wrote about positively in How to Make Money in Any Market.
Cramer had already highlighted EPD earlier in September. Here’s why he sees the stock as a pipeline winner.
Robust Cash Flows And Fee-Based Resilience Drive The Bull Case
The fundamental bull case for Enterprise Products Partners L.P. is supported by strong financial performance and expanding operational margins. During the quarter, the company reported net income attributable to common unitholders climbing 28% to $1.84 billion, translating to $0.84 per diluted share and comfortably surpassing Wall Street consensus expectations by $0.09. Total revenue surged 61% to $18.27 billion. Adjusted EBITDA reached $2.83 billion, supported by strong volume growth across its extensive processing and pipeline network.
Furthermore, the company generated a record $2.5 billion in adjusted cash flow from operations, driven heavily by its fractionators and marine export terminals. Unlike upstream drillers whose fortunes swing violently with commodity prices, Enterprise Products relies predominantly on fee-based and differential-based revenue structures, ensuring predictable, high-margin cash flow that heavily supports its distribution yield and fuels multi-billion-dollar infrastructure expansions like the Houston Ship Channel LPG terminal.
Capital Intensity And Commodity Market Exposure
Investing in Enterprise Products Partners L.P. could come with notable structural risks inherent to the midstream energy sector. The partnership operates in a heavily capital-intensive environment, with management projecting 2026 net growth capital expenditures to range between $2.9 billion and $3.4 billion, along with substantial sustaining capital outlays. Sustaining these massive capital expenditure programs requires continuous access to debt and equity capital markets, making the company sensitive to shifting macroeconomic interest rate environments.
While fee-based contracts insulate the firm from direct commodity price crashes, volume throughput remains tethered to upstream production activity in major basins like the Permian. Any unexpected slowdown in domestic drilling activity, logistical bottlenecks at export hubs, or unexpected regulatory hurdles facing petrochemical facilities could compress operating margins and constrain the free cash flow available for unitholder distributions.
Institutional Ownership And Conservative Short Interest
According to Insider Monkey’s database tracking over 1,000 hedge funds, 32 hedge funds held a stake in the company in both the first and second quarters of the year, maintaining steady institutional sponsorship. Among those hedge funds, Fairholme (FAIRX) maintained the most prominent position in the company with around 5.456 million shares. Meanwhile, short seller activity remains low, with short interest standing at 2.40% of the public float.
Moreover, at a forward earnings multiple of 11.9x, the company trades in line with its sector median. However, it trades at a lower forward PE compared to its notable peers such as Energy Transfer LP (ET), Kinder Morgan, Inc. (KMI), and Enbridge Inc. (ENB), as the three trade at forward PE of 12.03, 20, and 20.37, respectively. With steady institutional backing and minimal short interest cushioning the partnership against broader energy sector volatility, Enterprise Products Partners L.P. remains a favored vehicle for investors looking to capitalize on domestic natural gas liquids demand under disciplined executive leadership.
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