) hit a 52-week high of $35.52 on Jul 8, 2013. The shares closed
at $35.43, 27.2% above the year-earlier share price of $27.85.
Spectra Energy is one of North America's premier natural gas
infrastructure plays with a strong presence in growth markets.
These positions should lead to value-accretive growth
opportunities in the coming years.
Though we believe commodity price concerns remain for the near
term, the company's core fee-based businesses of storage,
transmission, distribution and Canadian gathering and processing
have the potential to move the needle toward solid earnings and
cash flow growth in the long run. Spectra acquired the
Express-Platte pipelines from Kinder Morgan and two Canadian
pension funds in Mar 2013. This acquisition will shift Spectra's
portfolio from the commodity risks related to natural gas liquids
to a growing market of crude oil pipeline business. Moreover, the
acquisition will likely add 3 cents to 5 cents per share to
annual earnings in the first year. Going forward, Spectra intends
to increase its presence in the oil and refined products
pipelines, storage tanks and terminals business.
Management remains optimistic on its future performance based
on its expansion program, which remains on track. With its market
leading position, diversified asset portfolio and strong
investment opportunities, we expect Spectra Energy to sustain the
growth momentum. Additionally, Spectra plans to invest $1 billion
per year through 2015 on fee-based gas infrastructure growth
projects. The company expects to commission around 8 projects
through 2016. Among these projects - Southern Hills and Sand
Hills Pipelines, Front Range Pipeline, and Texas Express
Pipeline, are expected to be come online by 2013.
However, Spectra's results are vulnerable to fluctuations in
natural gas markets. The proposed liquid-rich drilling activities
by the company clearly suggest that volatility in natural gas
prices will change little going forward. Major investments in
several projects in Canada also expose Spectra to fluctuations in
currency rates that may affect the results of its operations. The
company presently retains a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for 2013 and 2014 is $1.53 and
$1.61 per share, reflecting year-over-year growth of 7.06% and
5.36%, respectively. Pipeline operator stocks worth considering
at the moment are
Atlas Energy, L.P.
Cheniere Energy Partners L.P.
Oiltanking Partners, L.P.
), all with a Zacks Rank #1 (Strong Buy).
ATLAS ENERGY LP (ATLS): Free Stock Analysis
CHENIERE ENERGY (CQP): Get Free Report
OILTANKING PTNR (OILT): Free Stock Analysis
SPECTRA ENERGY (SE): Free Stock Analysis
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