A Double Shot of Today’s Best Stocks to Buy: Making Money in Midstream

Todays top stocks to buyWith all the talk about an energy supply glut in the US, everyone’s forgetting that someone is still making big bucks storing and transporting it. Here are two of the best stocks to buy today…

Energy production has exploded in America in recent years.

The majority of the growth of course, has been spurred on by the record amount of oil and gas being extracted from our shale plays. It’s a trend that’s set to continue.

According to the Department of Energy (DOE), energy supply growth for the rest of this decade (with the exception of coal) is expected to increase exponentially.

But while supply is estimated to keep climbing, the outlook for demand isn’t so rosy…

For instance, recent news from China indicates that their energy-intensive manufacturing sector is showing signs of deceleration — putting a damper on what was previously near-unstoppable economic growth for decades.

Likewise, global energy consumption growth, as indicated by BP Plc’s annual Statistical Review of World Energy, is slowing.

Even OPEC has opined in, trimming its global oil demand outlook earlier this year.

Domestically, the sorry state of our pipeline system has created massive bottlenecks while approvals of new pipelines remain in limbo.Todays top stocks to buy

And let’s not forget about the export restrictions that still hover over the industries…

The Export Administration Act of 1979 limits crude sales only to Canada and Mexico, while the 1992 Energy Policy Act only allows natural gas exports to countries with which the US has a free trade agreement.

Yet in spite of all these headwinds, US fuel production continues to grow unabated.

In fact, crude oil output just reached a 21-year high.

And although natural gas production has tapered off from its 2012 highs, stockpiles are just slightly below the five-year average.

All this begs the question: with supplies continuing to outpace demand (and prices barely falling), where is all the oil & gas going?

The Midstreams are on Fire

After oil and gas products are pulled from the ground, they need to either be transported or stored in preparation for refinement and eventual sale.

But as you read above, the downstream segment has not been keeping pace.

On the other hand, the transportation and storage sector has benefited immensely from the record production.

“As the industry continues to grow, and as the industry continues to look for different ways of accessing markets, whether it’s by pipeline or by rail, all of that growth requires additional storage – particularly when the pipelines start to become full,” said David Smith, chief executive of midstream player Keyera Corp.

This is leading to major expansion plans for a number of midstream companies.

I believe those that will be seeing the most growth in the near-term are companies who are positioning themselves in the prolific Bakken and Marcellus plays. Which brings me to today’s best stocks to buy…

Best Stocks to Buy Now:

And one that’s made the biggest splash since the start of the year is Summit Midstream Partners (SMLP:NYSE).

In early January, Summit acquired a Bakken and Niobrara Shale midstream operator for $513 million.

Then in May, they announced that their 50,000 barrels of crude per day Polar Crude Oil and Water Gathering System in the Bakken commenced operations.

This was followed up in June by the acquisition of two separate natural gas gathering systems worth $460 million in the Bakken and Marcellus, respectively.

Since January, Summit’s shares have already shot up over 70%…but I think they have more room to climb once their latest expansion projects come online.

Another one to watch for is Crestwood Midstream Partners (CMLP:NYSE).

They recently merged with Inergy Midstream LP which, in addition to having storage and transportation facilities in California and Texas, has operations in New York (Marcellus) and North Dakota (Bakken).

In New York, Crestwood will be operating six separate gas storage facilities – giving them a tremendous foothold in the region.

And where they previously did not have exposure to the Bakken, the COLT Hub in Epping, ND will now give them a 120,000 bpd rail loading capacity along with 720,000 Bbl crude oil storage capacity.

Year to date, Crestwood’s stock price has risen nearly 24%.

With the merger expected to be completed sometime in Q3 2013, I anticipate the Company will finish strongly by the end of the year.

Yours in profits,
Todays top stocks to buy
John Holt
for Top Stock Millionaire
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