a little bragging and a little insight JP Morgan has raised its target for ENB to $60.
RBC has raised its target for ENB to $59
You heard it here first a couple of months ago. Was it the all-seeing-eye from the "Now you see me" movies?
Nope, just dumb luck or perhaps simply a matter of looking at the facts
At the time, I listed a few bullet points:
* falling interest rate scenario forces investors to take on more risk >>> the REAL money lies in the hands of low risk investors who will see ENB in a more positive light in the risk/reward spectrum
* ENB's ability to see a "buy" when nobody else was buying as seen with Spectra/ the LNG port/Dominion natgas distribution assets
* ENB's ability to assimilate acquisitions relatively seemlessly
Experienced recently pointed out that ENB's future earnings growth is going to be driven by slashing costs. He's a smart guy with obviously questionable choices of Deputies.
The importance of cost cutting for "utility like" companies like ENB is paramount because the regulators focus on tying annual prices increased to inflation indices and to limiting ROI on new CAPEX. That makes sense as regulators can't be seen allowing companies to "gouge" the public.
What regulators don't control is ROI for on existing assets.
ENB is now a bully in the movement and distribution of hydrocarbons in the USA. ENB skated through the antitrust laws that oversee monopolies in the Dominion natgas deal, but I'm not so sure they will be able to make additional deals in the future without a lot of scrutiny. A Canadian company controlling about 30% of critical infrastructure in the USA will eventually raise some eyebrows.
So, where does that leave ENB?
* Future aquistions are going to be difficult to achieve from an antitrust perspective
* CAPEX over the long term is going to be more difficult to justify due to the expectation of a "winding down of hydrocarbons as an energy source" in the future
* Politicians and environmentalists have pretty much destroyed any notion of expansion plans
* regulators that limit returns on new CAPEX take the fun out of the game
What would you do if you controlled a behemoth in an industry where you can't acquire, and you can't expand, and where regulators are going to limit revenue growth??????????
Simple answer is to be highly efficient operators and control returns by controlling costs.
Surely if I can see this, people that are much smarter than me can or will see it when they finally take the time to look at it. Assuming that analysts are forward thinking is folly as the street has a NOW mentality. That is why guys like Experienced that look at the big picture are so valuable.
xes and re always focused on matching price indices but they donie't eeping revenue growth The street rarely gives much if any credit to cost cutting as revenue growth is much more exciting to them (as the street earns a good chunk of its profits from raising capital.)
IMO, Elon is reshaping the business model for the Fortune 500 and hopefully someday for governments. He is focused on cost cutting via improving efficiency and eliminating redundancies. Kinda sounds something like ENB core skill set.