Energy Transfer LP (NYSE:ET), which commands a Strong Buy consensus rating on TipRanks, seems to be an attractive investment option for investors, including retail, institutional, and insiders. Generous rewards, in the form of cash distributions and capital gains, and its solid prospects have raised the investment appeal of this Dallas, Texas-based energy services company.
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An ownership breakdown of this $94.9-billion midstream company reveals that approximately 45% of its stake is owned by retail investors, 42% by institutional investors (including hedge funds), and 13% by corporate insiders.
Investors’ Stance on Energy Transfer
According to TipRanks, the sentiment of retail investors is Positive on Energy Transfer. In the last 30 days, the total number of portfolios holding ET units increased 1.6%, and top investors increased their exposure by 5.3%.
Further, hedge funds are Very Positive about ET. Their optimism in this energy services company is evident from the purchase of 2.2 million ET units in the last quarter.
Corporate insiders, too, are Very Positive about the prospects of Energy Transfer. In the last three months, insiders have purchased $31.5 million worth of ET units.
A pictorial representation of the insiders’ trading actions on ET in the last three months is provided below.
Interestingly, purchase transactions worth $192 million have been conducted by corporate insiders on Energy Transfer since 2021. Notably, 21.9 million units of this insider-friendly stock have been purchased by the company’s Executive Chairman, 1.2 million units by its Board of Directors, 262 thousand units by its CEO, and 93 thousand units by its CFO.
The company noted that a 13% insider ownership is very high, compared to <2% stake owned by insiders in its peer group, S&P 500, and S&P 500 Energy.
Energy Transfer’s Ways to Boost Stakeholder Value Look Impressive
The company has impressed investors with healthy rewards in the form of cash distributions. In February 2022, its cash distribution rate was $0.175 per unit, while the same was $0.20 per unit in May and $0.23 per unit in August.
The last cash distribution of $0.23 per unit represents a 15% increase over the rate paid in May and a 50% hike over the rate paid in Q2 of 2021.
In addition to this, the company invests heavily in capital expenditures and acquisitions, which, in turn, solidifies its growth prospects for the quarters ahead. In the first half of 2022, Energy Transfer used $589 million for making acquisitions and $1,458 million on capital expenditures.
Such investor-friendly actions are supported by the company’s solid cash positions. Exiting the first half of 2022, the company had cash and cash equivalents of $353 million, which included the impact of $4,724 million cash generated from operating activities.
Cash distributions, growth investments, and healthy cash positions seem to have boosted investors’ confidence in the stock. Year-to-date, the price of Energy Transfer units has surged 39.8%. Investors might have enjoyed capital gains from the steep surge in the unit price in 2022.
What Is the Future of Energy Transfer Stock?
As evident from the above discussion, Energy Transfer could lure investors who are looking for a regular flow of income or seeking capital gains. Also, the stock could interest both short and long-term investors.
Interestingly, Energy Transfer’s last closing price of $12.18 on Tuesday is very close to the upper end of the company’s 52-week price range of $7.96-$12.48. Also, ET’s average price target of $15 suggests upside potential of 23.15% from the current level. The highest forecast by analysts is $16 for ET units, and the lowest is $14.
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