Energy Transfer: Buy Now Before It Signs More Deals With Data Centers (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Energy Transfer missed expectations on Q4 FY24 EBITDA. But volumes are growing well and are likely to continue doing so as expansion capex spending ramps up at attractive returns.
• I estimate that ET's deal with CloudBurst Data Centers can boost TTM EBITDA by up to 4.24%. And the company is in talks with dozens of similar opportunities.
• ET stock trades at a 16.1% discount to peers, with rising EBITDA expectations and bullish technicals, suggesting continued outperformance against the S&P 500.
• Data center capex spending trends are a monitorable for my thesis. I am tracking the numbers and commentary of many companies that are linked to the data center growth theme.
• I rate ET stock a buy and prefer the common equity over the 9.25% fixed preferred security, as that would enable for greater capture of equity-like upside with a still good 6.5% forward distribution yield.

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