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Investing.com -- Bank of America has identified the top performers in the midstream oil sector, highlighting companies with strong cash flow potential and strategic growth opportunities.
These stocks represent key players in the energy infrastructure space, providing essential services in transportation, storage, and processing of oil, natural gas, and related products.
Bank of America assigns a price objective of $271 for Cheniere Energy, based on discounted cash flow analysis through 2050. The valuation uses a 7.0% cost of equity for contracted cash flows and 10.5% for marketed cash flows. Analysts see near-term marketing upside and free cash flow growth through low-cost Corpus Christi expansions.
While not included in the current valuation, the Sabine Pass expansion represents a free option value of approximately $15 per share with expected service by 2030. Potential risks include counterparty credit issues, construction delays, trade policy changes affecting exports, and commodity price fluctuations.
In recent news, Cheniere Energy reported second-quarter 2025 earnings and revenue that surpassed analyst expectations. The company also signed an agreement to supply 1.2 billion cubic meters of liquefied natural gas to Turkey’s state gas company, Botas.
2. Enterprise Products Partners, L.P. (EPD)
With a price objective of $37, Enterprise Products Partners shows promise based on Bank of America’s discounted cash flow valuation, implying an 11.2x 2026E EV/EBITDA multiple. The analysis uses a ten-year forecast outlook with a terminal growth rate of 1.5% and a 7.0% weighted-average cost of capital.
Key downside risks include supply chain disruptions, loss of major customers, and sustained lower commodity prices, which could impact volumes across EPD’s infrastructure network.
Enterprise Products Partners announced second-quarter 2025 results that exceeded earnings per share forecasts, though revenue was below expectations. The company also completed the acquisition of Occidental’s natural gas gathering assets in the Midland Basin for $580 million.
3. Targa Resources Corp. (TRGP)
Bank of America sets a $200 price objective for Targa Resources, derived from discounted cash flow valuation with an 11.5x 2026E EV/EBITDA multiple.
The model uses a ten-year outlook with 2.0% terminal growth and a 7.5% WACC. Potential challenges include commodity price downturns affecting producer activity in TRGP’s core basins, slower-than-expected volume growth, counterparty credit deterioration, and reduced capital spending by oil and gas producers.
Targa Resources posted second-quarter 2025 earnings per share that beat analyst forecasts, while revenue fell short of projections. Following the results, BMO Capital initiated coverage on the company with an Outperform rating, and CFRA raised its price target.
With a price objective of $100, Oneok’s valuation implies an 11.5x 2026E EV/EBITDA multiple based on discounted cash flow analysis. Bank of America uses a ten-year forecast with 1% terminal growth and a 7.0% WACC.
Upside potential includes stronger commodity prices, accelerated oil and NGL demand growth, increased producer capital spending, faster deleveraging, favorable price differentials, and lower corporate taxes. Downside risks involve lower commodity prices, reduced demand growth, and decreased producer activity in the Bakken region.
Bank of America assigns a $32 price objective for Kinder Morgan , based on discounted cash flow valuation implying a 12.0x 2026E EV/EBITDA multiple.
The analysis uses a ten-year outlook with 2.2% terminal growth and a 7.0% WACC. Upside factors include higher commodity prices, improved long-term conditions in crude oil and refined products businesses, stronger pipeline recontracting, and energy transition opportunities.
Downside risks encompass economic weakness, slower demand growth, lower oil/gas prices, commercial challenges, higher cash taxes, and weaker pricing in KMI’s CO2 segment.
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