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| Pipeline profits: Enbridge (ENB) |
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| Thursday, 21 August 2008 | |
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"Crude oil futures recently hit a three-month low after the Energy Department reported a surprise jump in oil stockpiles and weakening demand in the United States. This led to a much overdue pullback in oil prices. "No surprise. I’ve been expecting a sell-off, one that should bring oil down to the $107 level — before the next leg up begins. However, I remain as bullish as ever on oil. "Demand will bounce back, growth in China and India continues, and the dollar, despite its recent rally, remains in a long-term bear market. So once this pullback is over, I expect oil to resume its bull market. My $200 target stands firm. "Meanwhile, Enbridge Inc., Canada’s No. 2 pipeline company, recently reported its second-quarter profits jumped 347% to $644.9 million. The stellar performance was helped by the sale of assets in Spain. "The company plans to use some of those profits to expand its pipeline system to transport Alberta’s oil-sands crude to the U.S. and other markets. "Production from the oil-sands deposits (which are the world’s second-largest oil reserves outside of Saudi Arabia) are projected to jump to 2.77 million barrels a day by 2015 from 1.2 million last year. "Enbridge is at the forefront of this effort and stands to make some serious profits, especially due to the proximity of those reserves to the United States, the world’s thirstiest oil consumer. "ENB’s shares, up 37% since first added to our recommended list, are well positioned to continue climbing from here. The company also pays a decent dividend with a 2.98% 12-month yield. The next dividend of 32 cents will be paid on Sept. 1." |
"Despite the expected pullback in oil, we're as bullish as ever," notes
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