In this article, we will take a look at some of the best pipeline stocks.
The global pipeline market is part of the energy sector, influenced by the demand and supply of energy. According to a report by Fortune Business Insights, the global pipeline transportation market reached a valuation of $20.57 billion in 2023. Forecasts indicate this market will expand to $34.38 billion by 2032. This growth trajectory represents a Compound Annual Growth Rate (CAGR) of 5.43% throughout the projected period. Notably, North America holds the leading position in the global market in 2023, capturing a 43.32% share.
The United States possesses an extensive and intricate network of pipelines, vital for the transportation and storage of oil, natural gas, and other energy products. The U.S. pipeline network is a critical component of the national energy infrastructure, facilitating the safe and efficient transportation of oil, natural gas, and NGLs, supporting economic activity and ensuring energy security. This infrastructure forms the backbone of the nation’s energy sector, ensuring the efficient movement of resources from production sites to consumers. In a report published by IBISWorld, the Oil Pipeline Transportation sector in the US stands at a value of $15.9 billion in 2024.
The pipeline industry is continuously evolving, driven by technological advancements and changing energy demands. Innovations in pipeline materials, monitoring systems, and leak detection technologies are improving safety and efficiency. The growing focus on reducing greenhouse gas emissions is also driving the development of pipelines for transporting carbon dioxide for sequestration and hydrogen for clean energy applications.
The IEEFA report highlighted that the fossil fuel sector has underperformed the broader market in 7 of the last 10 years. This shows a general trend of underperformance of the fossil fuel sector, which pipelines are a part of, when compared to the general market. However, during terms of economic recovery, increased industrial activity and consumer spending typically lead to higher energy demand, benefiting pipeline companies, leading to improved performance. Especially in terms of the current President’s administration.
Companies in the fossil fuel segment could benefit from the current administration’s potential rollback of climate initiatives, while renewables could face headwinds from reduced government support.
Pipeline companies have underperformed the overall market performance, especially over the past 5 years where TECH firms have been the centre of attention due to the popularity of AI amongst investors. This highlights an opportunity for investors seeking stable dividend yields or steady income streams. The pipeline industry can be attractive to investors during economic recovery due to its potential for stable cash flow and dividend payouts.
Master Limited Partnerships (MLPs) offer distinct advantages over traditional U.S. stocks, primarily centred on their unique tax structure and resulting higher yields. Unlike corporations that face double taxation, MLPs are pass-through entities, meaning profits are distributed directly to unitholders (investors) without incurring corporate income tax. The current tax rate for corporations in the US is 21%, compared to MLP stocks which pay between 10-20%. This can translate to consistent distributions, often yielding higher than traditional dividend-paying stocks; with yields often to be in the range of 5%-8%, or more, whereas the market’s average dividend yield is much lower, generally around 2%. Given this, we will take a look at some of the best pipeline stocks.
QiuJu Song/Shutterstock.com
Our Methodology
For this list, we used the Finviz stock screener to filter out pipeline and MLP stocks. Next, we manually searched for the average upside potential of each stock and selected 10 stocks with the highest values. The list below is ranked in ascending order of the upside potential as of March 14.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Global Partners LP (NYSE:GLP)
Upside Potential According to Analysts: 3.98%
Global Partners LP (NYSE:GLP) is a major player in the logistics and distribution of diverse fuels across the US and Canada. The company has a portfolio consisting of gasoline, distillates, renewable fuels, crude oil, and propane, serving wholesalers, retailers, and commercial clients. It operates in three segments, namely the wholesale, gasoline distribution & station operations, and the commercial segments. The Wholesale segment focuses on heating oil and gasoline distribution, using rail, barges, trucks, and pipelines. The Gasoline Distribution arm supplies branded and unbranded gasoline to stations, operates convenience stores, and provides related services. The Commercial segment caters to public sector and industrial clients with various fuels and custom blends. They are also involved in transporting petroleum and renewable fuels via rail from the US and Canada.
Global Partners LP (NYSE:GLP) reported a revenue of $4.19 billion in Q4 of 2024, missing estimates by $1.62 billion. EPS was $0.52 and EBITDA of $97.8 million. President and CEO of Global Partners LP (NYSE:GLP) Eric Slifka spoke during the earnings report call on the impact of tariffs, specifically Canada. He stated:
“Let me briefly address the steps we are taking to prepare for the potential implementation of tariffs on oil and gas imports, particularly from Canada and Europe. We continue to actively monitor global economic conditions and the evolving supply landscape, holding as we always do daily meetings, and additional scenario planning to assess potential impacts of any proposed — imposed and proposed tariffs.
In summary, as evidenced by our results, our diverse asset portfolio continues to drive strong performance. With our expanded operating footprint, greater access to critical pipeline and marine infrastructure, and a strong balance sheet, we are well positioned to leverage our supply terminal, and marketing expertise to seize growth opportunities and create value for our unit holders.”
Global Partners LP (NYSE:GLP) has a market capitalization of $1.83 billion, with a consensus among analysts of the trading twelve month average price at $56.0, an upside of 3.98%.
9. MPLX LP (NYSE:MPLX)
Upside Potential According to Analysts: 5.94%
MPLX LP (NYSE:MPLX) is a subsidiary of Marathon Petroleum Corporation, a prominent US midstream energy company established in 2012 and headquartered in Findlay, Ohio. The company operates in two segments, namely logistics & storage, and gathering & processing segments. It handles natural gas gathering, processing, and transportation; NGLs fractionation, storage, and marketing; and crude oil and refined product logistics. They also manage produced water and engage in residue gas and condensate sales.
MPLX LP (NYSE:MPLX) operations extend to inland marine businesses, including barge transportation of diverse products and a marine repair facility. Additionally, they are involved in fuel distribution and operate refining logistics, terminals, rail facilities, and storage caverns. MPLX runs terminal facilities for the receipt, storage, and blending of refined petroleum products via pipeline, rail, marine, and road transport. MPLX GP LLC serves as its general partner. Their extensive infrastructure supports the flow of energy across the US.
MPLX LP (NYSE:MPLX) Q4 2024 earnings report shows revenue of $3.06 billion, missing analysts’ estimates by $10.10 million, while EPS was $1.07. EBITDA for the fourth quarter was $1.8 billion, taking the total EBITDA of 2024 to $6.8 billion.
Out of the 16 analysts following MPLX LP (NYSE:MPLX) on Wall Street, a consensus on the twelve month trading price of $56 reveals an upside of 5.94%
8. Hess Midstream LP (NYSE:HESM)
Upside Potential According to Analysts: 6.99%
Hess Midstream LP (NYSE:HESM) owns, develops, and operates midstream assets, providing fee-based services primarily to Hess and third-party clients in the US. They operate through three segments, namely Gathering, Processing & Storage, and Terminaling & Export segments.
The Gathering segment manages extensive natural gas and crude oil and produces water-gathering systems, encompassing thousands of miles of pipelines. The Processing and Storage segment features the Tioga Gas Plant and is interested in the Little Missouri 4 gas processing plant and the Mentor Storage Terminal, which handles propane storage and rail/truck loading. The Terminaling and Export segment owns the Ramberg terminal, Tioga rail terminal, crude oil rail cars, and Dakota Access Pipeline connections, including the Johnson’s Corner Header System. These assets facilitate the transportation and export of crude oil and natural gas products. Hess Midstream’s infrastructure supports the efficient movement of energy resources within the Bakken region.
Hess Midstream LP (NYSE:HESM) beat analyst expectations for Q4 2024, with revenue at $395.90 million, up by $5.03 million, while EPS matched estimates at $0.68. Net income was $172 million and EBITDA for the fourth quarter was $298 million.
John Gatling, the President and CEO of Hess Midstream LP (NYSE:HESM) backed the company’s strong performance during the company’s recent annual earnings call. He said:
“2024 was a year of continued strong performance execution for Hess Midstream. We delivered significant volume growth, including 14% year-over-year growth in gas processing throughputs. Additionally, we made excellent progress on key multiyear projects to strategically grow our gas gathering system, while advancing our planned gas processing expansion.
Today, we issued our guidance release, extending our MVCs and growth profile through 2027, with gas volumes expected to grow by more than 25% from 2024. Our long-term growth remains driven by Hess’ planned development activity and increasing third-party volumes, reinforcing the need for additional gas processing capacity.”
7. USA Compression Partners LP (NYSE:USAC)
Upside Potential According to Analysts: 7.47%
USA Compression Partners LP (NYSE:USAC) is headquartered in Dallas, Texas, and specializes in natural gas compression services across the United States. The company caters to clients in the oil and gas, independent producers, processors, gatherers, and transporters, providing essential compression for natural gas and crude oil operations. USA Compression Partners LP (NYSE:USAC) services portfolio extends to infrastructure applications, supporting centralized natural gas gathering systems, processing facilities, and gas lift applications in crude oil wells. Additionally, they offer natural gas treating services, including carbon dioxide and hydrogen sulfide removal, along with natural gas cooling and dehydration.
During the earnings call of Q4 2024, USA Compression Partners LP (NYSE:USAC) top line beat analyst expectations by $2.18 million at $245.89 million, and EPS of $0.18.
USA Compression Partners LP (NYSE:USAC) recently went through an organizational restructuring, with Chris Paulsen taking on the role of Chief Financial Officer (CFO) and announced Chris Wauson would be the new Chief Operating Officer (COO). Chris Paulsen took the Q4 earnings call as an opportunity to reiterate on the company’s continuing focus on improving performance and that it would not impact performance in the short term. He said:
“Right now, that is the focus, at least as it relates to our growth capital in 2025 is make sure that the relative standing and relative measures and debt measures of the business are not impacted in a significant way, especially as it relates to the ability to go out and refinance some of our fixed notes. So that’s the near-term view for me in managing the business.”
Moving forward, the company provided guidance on the EBITDA to range between $590 million and $610 million. Analysts predict a strong impact of these changes on the long-term performance of USA Compression Partners LP (NYSE:USAC), with an average twelve-month trading at $27.33, representing an upside of 7.47%.
6. Delek Logistics Partners, LP (NYSE:DKL)
Upside Potential According to Analysts: 8.43%
Delek Logistics Partners, LP (NYSE:DKL), a subsidiary of Delek US Holdings, Inc., operates from Brentwood, Tennessee, providing diverse midstream services across the US. Established in 2012, they specialize in gathering, pipeline transport, storage, wholesale marketing, and water disposal/recycling.
The company’s Gathering and Processing segment manages pipelines, tanks, and offloading facilities, handling crude oil and natural gas gathering, processing, water management, and storage, while also offering third-party crude oil transportation. The Wholesale Marketing and Terminalling segment operates refined product terminals and pipelines in Texas, Tennessee, and Arkansas, offering marketing and terminalling services to external clients. While the Storage and Transportation segment utilizes tanks, offloading facilities, trucks, and related assets for the transport and storage of crude oil, intermediates, and refined products. Delek Logistics GP, LLC serves as their general partner, ensuring the efficient operation of their extensive midstream network.
Delek Logistics Partners, LP (NYSE:DKL) reported revenue of $209.86 million during its Q4 2024 earnings call, $30.18 million lower than expectations. EBITDA was recorded at $107 million and EPS was $0.68. In 2024, DKL is taking key steps to become a premier full service crude, natural gas, and water provider in the prolific Permian Basin and the company expects to make further progress in 2025.
Delek Logistics Partners, LP (NYSE:DKL) currently has a market cap of $2.18 billion and consensus amongst analysts of a twelve month trading price of $44.75, with an upside of 8.43%.
5. Sunoco LP (NYSE:SUN)
Upside Potential According to Analysts: 9.88%
Sunoco LP (NYSE:SUN) is a major US energy infrastructure and motor fuel distributor. The company operates in three segments, namely Fuel Distribution, Pipeline Systems, and Terminals. The Fuel Distribution segment focuses on distributing motor fuels, propane, and lubricating oil to diverse clients, including dealers, distributors, commercial consumers, and retail locations. They also lease real estate and offer non-fuel products and services, such as in-store merchandise, food services, and car washes. The Pipeline Systems segment manages an integrated network of refined product, crude oil, and ammonia pipelines and terminals. While the Terminals segment operates transmix processing facilities and refined product terminals, providing blending, additive injection, handling, and filtering services. Sunoco LP’s diversified operations support the distribution and logistics of essential energy products across the United States.
Sunoco LP’s (NYSE:SUN) earnings report for Q4 2024 shows a topline of $5.27 billion, missing analyst estimates by $914 million. EBITDA was reported at $446 million and an EPS of $0.75. Transcripts reveal a spending of $74 million on growth capital and $58 million on maintenance capital.
Joe Kim, the President and Chief Executive Officer of Sunoco LP (NYSE:SUN) stood by the company’s recent performance during the Q4 quarterly earnings report. He had this to say:
“Looking forward, we expect the fundamentals for all three segments to remain very attractive in 2025 and beyond. We’re off to a strong start and we expect 2025 to be another record year.
Let me finish with one final thought. We have gained a solid reputation as a thoughtful defensive play within the mid-stream sector, given our ability to deliver strong results in volatile commodity environments as well as challenging macro environments such as inflation and even pandemics.”
Sunoco LP (NYSE:SUN) provided guidance for EBITDA to range between $1.9 billion to $1.95 billion for 2025, compared to $1.56 billion during 2024. Analysts’ consensus of the average twelve-month trading price at $63.50, reflecting an upside of 9.88%.
4. Enterprise Products Partners L.P. (NYSE:EPD)
Upside Potential According to Analysts: 10.99%
Enterprise Products Partners L.P. (NYSE:EPD) is a major provider of midstream energy services, operating across four segments. The company caters to producers and consumers of natural gas, NGLs, crude oil, petrochemicals, and refined products.
The NGL Pipelines & Services segment focuses on natural gas processing, NGL marketing, pipelines, fractionation, storage, and marine terminals. The Crude Oil Pipelines & Services segment manages crude oil pipelines, storage, and marine terminals, including a large fleet of tank trucks, and engages in crude oil marketing.
The Natural Gas Pipelines & Services segment operates natural gas pipeline systems for gathering, treating, and transporting natural gas, and manages underground storage facilities. The Petrochemical & Refined Products Services segment handles propylene fractionation, butane isomerization, octane enhancement, and refined product pipelines and terminals, including ethylene export terminals, alongside related marketing and transportation services. Their vast infrastructure supports the efficient movement of diverse energy commodities.
Enterprise Products Partners L.P. (NYSE:EPD) top line during Q4 2024 was $14.20 billion, down 2.88% YoY but beat estimates by $74.57 million. EPS was $0.74, beating estimates by $0.04. EBITDA for Q4 was $2.6 billion, which took the annual EBITDA to $9.9 billion.
Enterprise Products Partners L.P. (NYSE:EPD) distinguishes itself within the midstream sector as one of a select few companies holding an investment-grade rating, and further, it maintains one of the lowest debt ratios within that group. This financial strength translates to exceptionally low investment risk, particularly given the midstream industry’s inherent stability, often compared to that of utilities. The company’s conservative management practices provide an additional layer of security, making it a particularly safe investment. Its performance during Q4 continues to strengthen the growth outlook by analysts.
3. Plains All American Pipeline L.P. (NASDAQ:PAA)
Upside Potential According to Analysts: 12.62%
Plains All American Pipeline L.P. (NASDAQ:PAA) is a subsidiary of Plains GP Holdings, L.P. It is a key player in North American midstream energy, specializing in crude oil and NGL logistics. The company operates in two segments, namely Crude Oil and NGL.
The Crude Oil segment focuses on gathering and transporting crude via pipelines, trucks, barges, and railcars, while also providing terminaling, storage, and related services, including merchant activities. While the NGL segment handles natural gas processing, NGL fractionation, storage, transportation, and terminaling. They deal with ethane, propane, butane, and natural gasoline, essential for heating, engines, and industrial fuels.
Plains All American Pipeline L.P. (NASDAQ:PAA)’s extensive infrastructure across the US and Canada supports the efficient movement of crude oil and NGLs, serving producers and consumers. Plains All American plays a vital role in connecting energy supply with demand.
In the Q4 2024 results, Plains All American Pipeline L.P. (NASDAQ:PAA) reported revenue of $12.04 billion, missing estimates by $1.36 billion, while EPS was $0.42 and EBITDA was $729 million.
The company’s Chairman and CEO Willie Chiang was noted as saying during his closing comments:
“We remain confident as we enter 2025 with strong operational momentum and are well positioned to play offense in continuing to deliver value to our unitholders”.
He continued to reiterate on the company’s financials, stating:
“Our balance sheet strength provides significant financial capacity and flexibility. Secondly, we continue to demonstrate capital discipline and the ability to execute on our efficient growth initiatives including growing the business both organically and inorganically through accretive and synergistic bolt-on acquisitions.”
Regarding Plains All American Pipeline L.P. (NASDAQ:PAA) future plans, Executive Vice President and Chief Financial Officer, Al Swanson stated a recent change in the operating model of NGL. Notably, the company would be shifting toward a fee-based model, with roughly 45% of 2025 revenues expected to come from fee-based activities.
2. Alliance Resource Partners L.P. (NASDAQ:ARLP)
Upside Potential According to Analysts: 23.28%
Alliance Resource Partners L.P. (NASDAQ:ARLP) is a diversified natural resource company focused on coal production and marketing. The company serves utilities and industrial users across the US, operating through four segments—Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties, and Coal Royalties. It produces thermal and metallurgical coal with varying sulfur and heat contents.
The company manages seven underground mining complexes in multiple states. While additionally owning and leasing oil and gas mineral interests and coal mineral reserves, the company operates a coal loading terminal on the Ohio River.
Beyond coal, Alliance Resource Partners L.P. (NASDAQ:ARLP) supplies mining technology products and services, including data networks, communication systems, proximity detection, collision avoidance, and analytics software.
Alliance Resource Partners L.P. (NASDAQ:ARLP)’s Q4 2024 results showed a top line of $590.09 million, missing estimates by $45.51 million and EBITDA was $124 million. For the full-year 2024, revenues were $2.4 billion, adjusted EBITDA was $714.2 million, net income was $360.9 million, and EPS was $2.77.
The consensus by analysts on Alliance Resource Partners L.P. (NASDAQ:ARLP)’s average twelve month trading price is $30.50, representing an upside of 23.28%.
1. Energy Transfer LP (NYSE:ET)
Upside Potential According to Analysts: 23.73%
Energy Transfer LP (NYSE:ET) is a comprehensive energy infrastructure provider across the US. The company operates across three diverse segments, including gas and oil transportation, storage, and processing. It owns extensive natural gas pipelines, both intrastate and interstate, and provides gas sales to various customers. The company also operates a vast NGL pipeline network, fractionation, and storage facilities. They offer crude oil transportation, terminalling, and marketing, owning thousands of miles of crude oil pipelines.
Furthermore, they distribute motor fuels under the Sunoco and EcoMaxx brands, provide natural gas compression, and engage in wholesale power trading. Their diverse operations include carbon dioxide and hydrogen sulfide removal, coal and natural resource management, timber sales, and royalty collection. It is worth noting that the company’s extensive infrastructure and services span the entire energy value chain.
Energy Transfer LP (NYSE:ET) stated a top line of $19.54 billion during the Q4 Earnings call report. EBITDA was $3.9 billion, while the cumulative EBITDA for the year of 2024 was $15.5 billion, and an EPS of $0.29.
Energy Transfer LP (NYSE:ET) has pursued a strategy of substantial capital expenditure, as shown by the $4 billion invested in growth and maintenance capex for FY2024, a 69.4% YoY increase, and the projected $5 billion for FY2025. This aggressive investment has enabled the company to significantly expand its operational capacity across its pipeline networks, processing facilities, export capabilities, and gas-fired electric generation plants. Simultaneously, management solidified its initial data center agreement with Cloudburst Data Centres by February 2025.
Co-CEO Mackie McCrea spoke on the company’s capex investments during the Q4 earnings call, stating:
“You know the $5 billion, those were projects we’ve sanctioned, they’re moving forward, great rate of returns. We’re very, very, very excited about that. And when you look at what’s driving a lot of that is midstream. I mean midstream is kind of the, call it the heart. It’s what starts everything. It’s where we gather and process and treat, compress and then put it into our system.”
Energy Transfer LP (NYSE:ET) has a market capitalization of $63.13 billion, with an average twelve month trading price of $22.73, an upside of 23.73%.
Overall, Energy Transfer LP (NYSE:ET) ranks first on our list of the best pipeline and MLP stocks. While we acknowledge the potential for ET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
