Enterprise Products Partners LP (EPD)

[OldAIMGuy]

Good morning Pete, Re: EPD safety and value considerations...........

Value Line gives EPD a "Financial Strength" rank of B++ currently. They show a 3-5 year potential price target range of $40 to $60 which would seem reasonable and attractive from today's price. They give it a trailing P/E of 16 right now which is on target for their inddustry.

The Price/Book Value is currently around 2.5 which is neither cheap or excessive in today's market. VL seems to indicate no significant expansion through capital expenditures right now. However, they show ~12% annual growth in sales and earnings with slightly less in "free cash flow" and distributions. Their debt structure is about half their market capitalization and Value Line suggests this is better than average for their industry.

Something I look at is the number of stock options along with insider buying and selling of shares. In EPD's case there have been options granted with no sales over the last year. That's usually a healthy sign. Another thing I look for is the 52 week High/Low ratio of share price. I buy with price appreciation over time, dividend capture over time and profitable volatility capture over time as my three goals. The total return of my holdings depends upon all three goals. EPD averages roughly 1.2:1 ratio of high to low annually. That's enough to generate modest trim and back fill trades for me. A portion of my total return is generated by trading some shared around my core position. I look for ~20% LIFO turns on those trading shares so the fit is okay.

Thanks for posting the article.