Can Pipeline Assets Foster Growth At TC PipeLines (TCP)?

We issued an updated research report on TC PipeLines LP (NYSE:TCP) on May 11, 2016. The natural gas transportation assets of the pipeline operator generate stable, recurring and low-risk earnings and cash flows. This is reflected in the partnership’s current Zacks Rank #2 (Buy), which implies that the stock will outperform the broader U.S. equity market over the next one to three months.

TC PipeLines owns stakes in natural gas transportation assets, which generate stable, recurring and low-risk earnings and cash flows. Its stake in the Northern Border Pipeline – a key link in natural gas transportation from western Canada to the U.S. Midwest – is particularly significant.

The positives were revealed in the partnership’s strong first-quarter 2016 earnings. The partnership reported earnings per unit of $1.10 that beat the Zacks Consensus Estimate of 91 cents and improved from 88 cents earned in the year-ago quarter. Solid performance by the partnership’s existing asset base along with the acquisition of Portland Natural Gas Transmission System supported the results.

Moreover, TC PipeLines has established a track of stable and growing cash distribution to unitholders. On top of that, the partnership’s acquisition of full interest in two major U.S. gas pipelines – Gas Transmission Northwest LLC and Bison Pipeline LLC from parent TransCanada Corp. – is expected to be immediately accretive to its distributable cash flow.

Investors should know that majority of the partnership’s pipelines are under long-term contract. This reduces TC Pipelines’ exposure to commodity price fluctuations.

Other Stocks to Consider

Apart from TC PipeLines other players in the energy sector that warrant a look are Murphy USA Inc. (NYSE:MUSA) , PetroChina Co. Ltd. (NYSE:PTR) and McDermott International Inc. (NYSE:MDR) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).


MURPHY USA INC (MUSA): Free Stock Analysis Report

MCDERMOTT INTL (MDR): Free Stock Analysis Report

PETROCHINA ADR (PTR): Free Stock Analysis Report

TC PIPELINES (TCP): Free Stock Analysis Report

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