It has been a difficult year in 2025 to invest in energy stocks. An expanded allowance for energy production and “drill baby drill!” both imply larger supplies of oil and gas, and the translation in supply/demand economics is lower energy prices. And while the S&P 500 has hit all-time highs, energy stocks as a whole in oil and gas have floundered. The scenario may have been even worse had it not been for a recovery in tariffs and in international geopolitical developments from the likes of Iran, Ukraine and Israel.
Oggonomics reviews the flow of daily research reports issued by Wall Street analysts to find hidden gems and hidden upside out there for short-term traders and long-term investors alike. There may still be some opportunities in the energy infrastructure space despite many of the ongoing concerns.
TD Cowen’s Jason Gabelman has said it’s not all bad out there. The analyst report identified three big energy infrastructure winners due to ongoing energy demand from data center growth and liquified natural gas (LNG) export opportunities. The caveat is that he does not see every infrastructure player winning equally. This is where the “strategic” nature of investing comes into play with specific picks rather than a shotgun approach.
The one problem impacting oil and gas stocks this week, even in infrastructure, is that Exxon Mobil Corporation (NYSE: XOM) has just warned that lower liquids prices will hurt its second quarter by $800 million to $1.2 billion versus the first quarter. It also warned that gas prices would have a negative effect of $300 million to $700 million in Q2 versus Q1. Not all is lost though.
Investors should keep in mind that the Energy Select Sector SPDR Fund (NYSEArca: XLE) was last seen up just 0.6% YTD, but that was down 12% from a 52-week high. The Alerian MLP ETF (NYSEArca: AMLP) was also up just 0.6% YTD, but it is down less than 9% from its 52-week high. Also, please keep in mind that no single analyst report should ever be the sole reason for investors to make buy or sell decisions. Please read the disclaimers below.
THREE POTENTIAL BIG WINNERS
Energy Transfer LP (NYSE: ET) is a top midstream oil and gas player with a $61 billion market cap. TD Cowen initiated Energy Transfer with a Buy rating and the firm assigned a $22 price target. This represents 22% in implied upside from the prior $17.97 close, but then there is the LP’s 7% distribution yield-equivalent that has to be factored in as dividend income and return of capital. Its two public subsidiaries and diversified operations are harder to put in a “thematic box” similar to other infrastructure players. That said, the firm sees expected growth and upside from multiple projects giving it an “undemanding” valuation as the $17.79 price is against a 52-week range of $14.60 to $21.45.
Kinder Morgan Inc. (NYSE: KMI) was started as Buy with a $34 price target at TD Cowen. This implies upside of 19.7% before considering its 4% dividend yield. Gabelman noted that Kinder Morgan’s project backlog has grown rapidly and should continue to see incremental growth from LNG export demand and from the continued trends in data centers. At $28.41, its 52-week range is $19.68 to $31.48. Kinder Morgan’s market cap is $63 billion.
Williams Companies Inc. (NYSE: WMB) was assigned a new Buy rating and a $67 price target at TD Cowen. Its $58.64 share price and $71 billion market cap come with an implied 14% upside here in this call, as well as a 3.3% dividend yield. Gabelman sees Williams as the best positioned of midstream companies winning from dual demand trends from data center growth and LNG as its Transco gas pipeline makes up about 38% of EBITDA. TD Cowen also noted a fair valuation for Williams followed by longer-term upside opportunities.
Meanwhile… TD Cowen’s Gabelman started two other large infrastructure players much more cautiously. Enterprise Products Partners LP (NYSE: EPD) was started as Hold with a $33 price target. Its price was $31.51 ahead of the call with over a 6% yield equivalent from its distribution. Oneok Inc. (NYSE: OKE) was started as Hold with a $91 price target, versus a recent $82 with a 5% yield.
DISCLAIMERS
Please be informed that the analyst ratings and price targets mentioned above were issued by TD Cowen. Their ratings and targets show significant differences in ratings and in price targets from some other analyst ratings and targets. Analysts sometimes get their thesis and outlook wrong. And sometimes the fundamentals of a company, its sector or the economy as a whole can change in an instant.
Oggonomics does not issue any formal ratings and does not maintain any price targets of its own in the companies mentioned in this report. Interpretations of how positive or negative the analyst calls are can also wildly vary from investor to investor.
No analyst ratings and their price targets, even those with the strongest conviction or strongest pessimism, ever come with any guarantees of profits. Analysts reports also never have money-back guarantees in the event that investors lose money.
