We came across a bullish thesis on Pembina Pipeline Corporation (PBA) on Substack by Canopy Research. In this article, we will summarize the bulls’ thesis on PBA. Pembina Pipeline Corporation (PBA)’s share was trading at $39.04 as of March 17th. PBA’s trailing and forward P/E were 18.73 and 17.30 respectively according to Yahoo Finance.
The sun rising over a sprawling network of oil & gas pipelines near Midland, Texas.
Pembina Pipeline Corporation (PBA) represents a compelling investment opportunity, as the market has significantly discounted its valuation due to political uncertainty. However, historical trends suggest that these concerns are often overstated and temporary. The company benefits from strong fundamentals, including a stable, fee-based revenue model, consistent cash flows, and strategic infrastructure expansions that position it for long-term growth. Pembina’s recent acquisitions and ongoing projects, such as the Peace Pipeline expansion and its increased exposure to U.S. natural gas markets, provide strong catalysts for future earnings growth. Additionally, Canada’s political landscape could shift in favor of the energy sector, further unlocking value for investors.
Recent developments in the midstream industry, including the completion of the Trans Mountain Expansion Project and Coastal GasLink, have significantly increased pipeline capacity and export opportunities, particularly to Asia. This positions Pembina well to capitalize on growing global demand for Canadian oil and natural gas liquids (NGLs). Despite concerns about potential U.S. tariffs under a Trump administration, historical precedent suggests that such measures are unlikely, given North America’s deeply integrated energy supply chain and the U.S.’s reliance on Canadian crude and gas imports. Furthermore, Canada’s increasing ability to export directly to Asia and Europe mitigates the risks associated with potential U.S. trade policy shifts.
Pembina is also actively pursuing growth through strategic acquisitions, such as its purchase of Enbridge’s stakes in the Alliance Pipeline and Aux Sable, as well as its investments in the Kaybob Complex. These moves enhance its operational control, expand its natural gas processing capabilities, and solidify its position as a leading midstream operator. The company’s ability to integrate these acquisitions into its existing infrastructure ensures stable margins and robust cash flow generation, further supporting its attractive 5.5% dividend yield.
A key potential catalyst is a political realignment in Canada. If Pierre Poilievre wins the next federal election, his pro-oil and gas policies could lead to a more favorable regulatory environment for midstream operators like Pembina. Repealing restrictive policies such as Bill C-69 could accelerate approvals for new infrastructure projects, attracting foreign investment and allowing Pembina to expand its operations further. This could drive a significant revaluation of the company’s assets, particularly as pipeline congestion eases and throughput volumes increase.
From a valuation perspective, Pembina remains attractively priced in a bullish scenario, where regulatory headwinds diminish and infrastructure expansions drive higher volumes, the stock could see a re-rating to $45–$47 per share, offering 24-30% upside. Compared to peers like Enbridge (ENB) and TC Energy (TRP), Pembina boasts stronger profitability metrics, higher returns on capital, and a more efficient operational model. With its defensive business, reliable cash flows, and multiple growth levers, Pembina presents an asymmetric risk-reward profile. The stock’s current valuation does not fully reflect its long-term potential, making it an attractive opportunity for investors seeking both income and capital appreciation.
Pembina Pipeline Corporation (PBA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held PBA at the end of the fourth quarter which was 17 in the previous quarter. While we acknowledge the risk and potential of PBA 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 timeframe. If you are looking for an AI stock that is more promising than PBA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.