Pick Enbridge Stock Over Enterprise Products in Today's Energy Market?

Enbridge Inc. ENB and Enterprise Products Partners EPD are two midstream energy giants. Given the nature of their business model, where shippers utilize their oil and gas storage and transportation assets, the players are less vulnerable to volatility in commodity prices.Over the past year, ENB has risen 33.2%, outperforming EPD’s 16.4% growth. However, this outperformance alone doesn't necessarily put Enbridge in a stronger position than Enterprise Products. To build a solid investment case, it’s important to dive deeper into the underlying business fundamentals and long-term outlook.One-Year Price Chart Image Source: Zacks Investment ResearchEnbridge’s Cash Flows More Insulated Than EPD’sThe minimization of commodity price volatility and volume risks in Enbridge’s business model stems from regulated or take-or-pay contracts, which support 98% of its EBITDA. Further, more than 80% of this midstream energy firm’s profits are generated from activities where the company can automatically raise prices or fees. Thus, ENB, a leading midstream energy player, is keeping pace with rising costs, which protects its earnings and dividend payments even in a high-inflationary environment.This stability in the business model is contributing to its investment-grade credit rating while providing long-term visibility into cash flows.On the contrary, Enterprise Products’ midstream business is more dependent on the volumes of oil and gas being transported through its pipelines. Hence, its earnings are more vulnerable to global demand for commodities. ENB Bets Big on Clean Energy While EPD Sticks to Fossil FuelsApart from traditional midstream operations, Enbridge is allocating huge capital toward cleaner energy, including wind farms and solar energy projects. With the world gradually demanding cleaner energy, the company’s renewable energy projects will meet the growing need for electricity from millions of homes.Enterprise Products, on the other hand, while staying focused mostly on fossil fuels and related chemicals, is losing appeal to investors with a preference for cleaner alternatives.Which Stock Should Investors Buy?Coming to the valuation story, it seems that investors are willing to pay a premium for ENB compared to EPD. This is reflected in Enbridge’s current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio of 15.13 compared with Enterprise Products’ 10.24. Image Source: Zacks Investment ResearchAlso, unlike EPD, Enbridge has witnessed upward earnings estimate revisions for 2025 over the past 30 days. Image Source: Zacks Investment ResearchGiven the current landscape, it's evident that Enbridge stands out as a stronger stock than Enterprise Products, offering more promising growth prospects. Hence, investors should refrain from EPD and bet on ENB right away. Currently, ENB has a Zacks Rank #2 (Buy), while EPD carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report Enbridge Inc (ENB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks