Energy Transfer Partners: Buffett Worthy
Finding a stock worthy of a big wig like Warren Buffett can be diamond in the rough. Energy Transfer Partners has great potential for a number of reasons. According to Ilan Moscovitz, explains why ETP would be appealing to Buffett, and why it may be on his stock picks.
1. Earnings power
Buffett is famous for betting on a sure thing. For that reason, he likes to see companies with demonstrated earnings stability.2. Return on equity and debt
Return on equity is a great metric for measuring both management’s effectiveness and the strength of a company’s competitive advantage or disadvantage — a classic Buffett consideration. When considering return on equity, it’s important to make sure a company doesn’t have an enormous debt burden, because that will skew your calculations and make the company look much more efficient than it actually is.
Company
Debt-to-Equity
Return on Equity (LTM)
Return on Equity (5-Year Average)
Energy Transfer Partners 129% 14% 13% Kinder Morgan Energy Partners (NYSE: KMP ) 157% 18% 19% Enterprise Products Partners(NYSE: EPD ) 119% 13% 12% ONEOK Partners (NYSE: OKS ) 118% 18% 20% 3. Management
CEO Kelcy Warren has been at the job since 2007. Prior to that, he held other senior jobs at the company, including co-CEO and co-chair. He’s also worked for several other energy companies including La Grange , U.S. Propane, and Cornerstone Natural Gas. He helped found Energy Transfer Company in 1996.4. Business
Oil and gas pipelines aren’t particularly susceptible to technological disruption.
ETP is definitely set up for success. With a solid check list completed, as well as stacking up well with its counterparts is very convincing. I’d have to agree, ETP is Buffett worthy.
Quotes taken from report by Ilan Moscovitz, Read the entire article here.
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