The 5 Best Stocks to Invest in Propane

When we think about the energy market we tend to think about oil and natural gas. However, thanks to the shale boom other hydrocarbon commodities that are byproducts of oil and gas drilling offer compelling profit potential for investors. One of those commodities is propane, which is a natural gas liquid, or NGL. Propane isn't just the fuel of summer BBQs as it is growing increasingly important on the global export market, which provides investors with several compelling profit opportunities.

Fire up the BBQ

More than 47 million American's own a propane grill, however, the fuel is much more versatile than just for grilling. About 5% of Americans use it as a home heating fuel while many others use it to fuel major appliances like a clothes dryer, water heater or stove while others use it to keep their swimming pools warm. It is also used by the commercial, industrial and agricultural sectors with uses ranging from a vehicle fuel to a key fuel for drying crops. Overall, the propane is used to meet about 2% of the country's energy needs.

Source: Enterprise Products Partners Investor Presentation

As that chart points out the U.S. has become the world's propane export king due to strong production growth and increased export capacity. That export capacity will continue to increase as Enterprise Products Partners is already in the process of more than doubling its leading export capacity. By the end of this year its capacity will have grown from 7.5 million barrels per month to 16 million barrels per month. Meanwhile, Targa Resources Partners has the second largest LPG export presence on the Gulf Coast, which can be further expanded in the future. While neither is a pure play on propane exports these are the two leading propane exporters in the country and offer investors the most upside to this growing market.

Investor takeaway

Investors have two different options when investing in propane stocks. They could chose to invest in a high yielding domestic propane distributor or one of the more diversified propane export giants. The choice is really between a high current yield with limited growth or a smaller current yield that has the potential to grow in the years ahead.

This $19 trillion industry could destroy the Internet

One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party -- click here for one stock to own when the Web goes dark.

The article The 5 Best Stocks to Invest in Propane originally appeared on

Matt DiLallo owns shares of Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More