Here's Why You Should Grab TC PipeLines (TCP) Stock Now
Zacks Investment Research | Nov 25, 2018 09:08PM ET
TC PipeLines, LP (NYSE:TCP) looks compelling at the moment. Given the partnership’s strong fundamentals as well as positive estimate revisions, it seems like this is the right time to add the stock to your portfolio. Moreover, the lack of takeaway capacity in Northern America created high demand for pipelines in the region, enabling the mid-cap master limited partnership, which possess strong energy infrastructure businesses, to earn huge profits. This makes the stock more attractive and thus substantiates its Zacks Rank #1 (Strong Buy).
Now let’s focus on some other important factors that make the partnership an investor favorite.
Impressive Midstream Portfolio
TC Pipelines’ enviable position as a supplier of gas from some of the most important shale basins in the United States — including Utica and Marcellus — provides it with ample growth opportunities. The partnership also continues to benefit from its stake in the Northern Border Pipeline, which is the primary transporter of gas from the low-cost Western Canada Sedimentary Basin to the U.S. Midwest.
Moreover, prospects for energy infrastructure throughout North America remain exciting, with the requirement of supporting producers in the growth of shale plays, especially in regions where there is a severe lack of facilities. This creates exciting opportunities for pipeline firms like TC PipeLines, which is poised to capture the economic benefit of this trend.
Strong Cash Flow Generation
TC PipeLines has a long history of generating strong distributable cash flow that allows it to provide stable cash distributions to its unitholders. In the first nine months of 2018, the partnership’s free cash flow increased 17% to $303 million, reflecting strength in its operations. Apart from providing cash distributions and funding organic growth opportunities, the cash flow generating ability should allow the partnership to reduce debt burden.
Favorable Current Ratio & Coverage
Notably, TC PipeLines has a current ratio of 1.02 compared with collective average of 0.73 of the Zacks Investment Research
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