Shares of Energy Transfer LP (NYSE: ET) have tanked roughly 20% in less than two weeks, which, as per Chuck Lieberman (CIO at Advisors Capital Management), is an opportunity to buy.
Lieberman’s bull case for Energy Transfer
According to Lieberman, an attractive dividend yield and a strong balance sheet are reasons enough to invest in the natural gas transmission company. On CNBC’s “Closing Bell: Overtime”, he said:
ET has 8.0% of dividend yield. Free cash flow is now over $2.0 billion. They reduced dividend a couple years ago to improve balance sheet. They succeeded, now the leverage ratio is down about 4.0. So, the balance sheet is healthy.
He’s convinced the NYSE-listed company will either continue to lift its dividend or announce a buyback programme – both of which will serve as a catalyst for the stock price to move up from here.
Why else does he like Energy Transfer stock
The U.S. natural gas is keeping above $7.0 an ounce as the ongoing war in Ukraine continues to exert upward pressure. Lieberman also sees a lot of potential in ET’s Lake Charles facility.
ET have a large project going, Lake Charles, that export LNG. They’ve already got contracts to sell 6 million tons a year. They won 10 before they give a green light to the project. But once they get that, they’ll also sell of large chunks of that project.
Last month, the Dallas-headquartered midstream energy company reported strong results for its fiscal Q1 and raised its 2022 guidance. The stock trades at a PE multiple of 9.27 at present.
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