Episode 7 out of 30 - Inflation Friendly Stocks

Hey Patreons, this is episode 7 out of 30 in our inflation friendly stocks.

As I mentioned, there are number of industries that tend to perform better during inflationary times, with energy being one of them. In my last post I told you about BP and in this post I want to share with you another energy stock which I feel will be a great fit for inflationary times.  

The stock is $EPD Enterprise Products Partners.

EPD is a Texas based midstream natural gas and crude oil pipeline company. Currently the price is $25.34 and I can see a price go to $29 per share by the end of Q1 next year. The average price target on TipRanks is $29 per share. 

During the past 6 months the share price increased by almost 18% but I feel it still has room to go up with the stock serving as a great inflation play.

This is no small cap company, it is a $55B company, with with a very nice 7.13% expected dividend yield!! 

Short interest in only 2.7% and the company is generating $29B in revenue last year.

The EBITDA margin in 27% and the NET INCOME is 13% which is great for a company of this profile. 

EPD is trading at reasonable multiples, the EV / Sales is 2.95 while EV to Ebitda is 10.9 and Price to Sales is 1,9 - This company is trading at very reasonable multiples right now. Going back to pre-COVID levels and considering inflation, this stock should serve as a very good safe haven to ride out the storm and its still trading at sane prices.

Warren Buffett once said that that owning a toll road is the best asset during an inflationary environment. The capital costs of building the road were made in the past and now you can jack up the toll price without incurring any additional variable costs. Energy pipeline such as EPD are on the same category and I think this is one of the best inflation hedges available right now. 

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