Protecting our savings from this dangerous world should be a main focus of our investing strategies. This is not easy, but investing in stocks like Enbridge Inc. (TSX: ENB) is a good start to achieving the financial comfort that we so desperately want and need.
In this article, I’ll take a look at Enbridge stock and determine whether this stock is a good buy at current prices.
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Booming energy demand
As Enbridge continues to connect supply with rising energy demand, the company is achieving record volumes with increasingly higher peak days. This is not surprising, as North American oil and gas is in high demand both domestically and internationally.
Enbridge is expanding as a result. In fact, $40 billion has been sanctioned for this expansion. This supports visible growth through to the end of the decade. Importantly, this growth is happening across all of Enbridge stock’s businesses.
For example, it is expected that North American liquefaction capacity will require more than 30 billion cubic feet (bcf) per day of natural gas by 2030. This compares to 11.4 bcf per day in early 2024. Also, Enbridge is advancing incremental mainline capacity, which will increase egress by the year 2028.
Enbridge’s outlook
Given this very favourable backdrop, Enbridge stock expects strong, steady growth in the years ahead. For 2026, the company is guiding towards earnings before interest, taxes, depreciation, and amortization (EBITDA) of between $20.2 billion and $20.8 billion. This represents a growth rate of between 1% and 4%.
In the years following 2026, Enbridge expects its growth rate to accelerate. The company expects its EBITDA, cash flow per share, and earnings per share (EPS) to grow at a compound annual growth rate of approximately 5%.
Enbridge – Investment thesis
Reliance on North American oil and gas is set to increase as energy security remains top of mind. The Iran war has brought home this point in no certain terms, but it was always an obvious selling point. Today, Enbridge is positioning itself to take advantage of this reality.
The investment case for Enbridge is clear and it’s solid. Enbridge stock’s cash flows are of the highest quality, as they are protected by regulation (in the case of its utilities’ cash flows), and the rest of the business is protected by long-term take or pay contracts. This kind of security, stability, and predictability is worth a lot – especially since we live in a time of conflict and risk.
Enbridge’s place in the energy landscape is also solid. The company serves more than 75% of North American refineries, and 20% of all gas consumed in North America.
Valuation
A major benefit of Enbridge’s low-risk business is the predictability of its earnings and cash flows. This has translated into 31 consecutive years of annual dividend increases.
In terms of valuation, Enbridge’s track record has shown the value of its business model – it’s steady through all market cycles and adverse events/crises. This, in and of itself is something that I would think that investors would want to pay up for. Yet, Enbridge stock’s valuation does not reflect this, in my view.
Enbridge stock is trading at 25 times next year’s earnings and yielding a very generous 4.9%. I wouldn’t call this cheap but I do think that given the company’s low-risk and strong growth profile, I think that Enbridge stock should receive a premium valuation.
