Sector: Energy- Oil/Gas Pipelines
#9 on our list of 10 is Enbridge. Enbridge is the largest North American Oil and Gas Pipeline manufacturer and maintenance company. I know, i know, oil pipelines are not the cleanest of businesses and there has been a lot of debate about the construction of the Keystone Pipeline. But, as an investment, Enbridge is a safe and stable high growth position to add to a portfolio. They pay a 3% annual dividend and their stock continues to make all-time news highs almost weekly.
The reason I like Enbridge vs a Conoco Phillips, Chevron, or Exxon, is the fact that the pipeline companies are not directly effected by the fluctuations in the price of the actual commodities (oil and gas). The way that oil prices swing from high to low has a direct impact on the stock performance of the oil producers and since oil inventories in the US are at seemingly high levels, the oil companies are having a hard time moving higher on their own growth prospects; If oil prices get hit, so do these oil producers. But not Enbridge, the fact that the US seems to have discovered more oil/gas and has larger reserves only helps a company like Enbridge. More oil and gas equals more need to build and transport through pipelines.
Understand though that pipelines don't come without their share of risks also. For example, if a pipeline leaks or breaks, the pipeline manufacturers will be responsible for the damages. Having a pipeline malfunction can hit the stock pretty hard. But, if you like steady stock appreciation, a solid dividend, and a very stable business model, Enbridge could be for you.
With a stock that climbs like Enbridge's does, you must be patient when choosing an entry point. I have been watching this stock for about 3 years and I have only made purchases twice as shown by the green arrows. Its true that any point along this trend would have been a successful purchase, but as prudent investors/traders we want to be looking for the most low risk/ high reward opportunities to be putting our money to work. When dealing with a trend like this you want to make your purchases just as price touches and bounces off of the lower trend support. I know looking back this looks like a perfect trend, but just remember that a trend can always change. We don't want to just throw our hard earned savings at a trend hoping that it continues; we want to assume the trend continues higher but we also don't want to be buying near the upper boundaries of the trend channel. As you can see, buying this stock after a sharp gain (like we have seen recently) is not the lowest risk or most profitable time to do so.
All in all, this is a very strong stock representing a stable and growing company. This isn't what I would call a "fast money" trade, but as a way to grow your savings consistently, you would be hard pressed to find one better.
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