The 1 Energy Stock I'd Buy Before Every Other Right Now

Uncertainty is the operative word for the stock market these days. Oil prices have skyrocketed. The Federal Reserve is worried about a resurgence of inflation. U.S. GDP growth has slowed. The economy lost 92,000 jobs in February.

Energy stocks are hot, but no one knows how long the momentum will last. A speedy resolution to the conflict with Iran could cause oil prices to decline sharply. The uncertainty makes it difficult for investors to know what to do.

I think there’s one alternative, though, that is ideal to buy when conditions are highly fluid. Here’s the one energy stock I’d buy before any other right now.

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The best “I-don’t-know-what’s-going-to-happen” stock

I view Enterprise Products Partners LP (EPD +0.46%) as the best “I-don’t-know-what’s-going-to-happen” stock in the energy sector. Because I really don’t know what’s going to happen with Iran, oil prices, or the economy, this midstream energy stock is a great pick.

Importantly, Enterprise Products Partners’ revenue stream is insulated from the volatility of oil and gas prices. The company’s business model is similar to a toll road. It collects fees for crude oil, natural gas, natural gas liquids (NGLs), petrochemicals, and other refined products flowing through its more than 50,000 miles of pipelines, which don’t change with the going market price for the commodities.

To be sure, Enterprise Products Partners benefits from the current Middle East crisis. The world is more dependent than ever on U.S. energy exports. Much of Enterprise’s business is built around exports. However, the demand for U.S. energy was increasing even before the U.S. and Israel attacked Iran.

I also like several other pipeline stocks. But Enterprise Products Partners offers greater stability than its rivals, in my view. The company arguably has the strongest balance sheet in the industry. It boasts an exceptional track record of generating consistent cash flow.

Enterprise Products Partners has also increased its distribution for an impressive 27 consecutive years. The LP’s distribution currently yields 5.6%, lower than its historical average due to the stock’s strong performance. Enterprise’s distribution coverage of around 1.7x provides the company with ample flexibility to keep distributions flowing and growing.

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NYSE: EPD

Enterprise Products Partners

Today’s Change

(0.46%) $0.18

Current Price

$39.28

Key Data Points

Market Cap

$85B

Day’s Range

$39.10 - $39.73

52wk Range

$27.77 - $39.73

Volume

4.4M

Avg Vol

4.5M

Gross Margin

12.86%

Dividend Yield

5.54%

A steady compounder

You can easily find other energy stocks that have soared more than Enterprise Products Partners in recent months. However, those stocks could also give up much of their gains if the U.S. and Iran agree on a peace plan that sticks.

Enterprise Products Partners is a steady compounder with lower risk and volatility. In times like these, that’s the kind of stock that jumps to the top of my list.