Here's Why Energy Transfer Stock Is a Buy Before May 6

Leo Sun, The Motley Fool

Wed, Apr 16, 2025, 3:00 AM 5 min read

President Donald Trump's unpredictable tariffs drove many investors from stocks toward more conservative investments over the past few months. However, many panicked investors tossed out the babies with the bathwater during that washout, and many stocks that were actually well-insulated from tariffs were unfairly crushed.

One of those stocks was Energy Transfer (NYSE: ET), which will release its next earnings report on May 6. I'll explain why it's a tariff- and recession-resistant investment and worth accumulating today as the broader market swoons.

Energy Transfer is a midstream company that provides pipeline, storage, and terminalizing services for natural gas, natural gas liquids (NGLs), crude oil, and refined products. By building that transportation infrastructure, it serves as a "toll-road operator" between upstream extraction companies and downstream refining companies. Energy Transfer operates more than 125,000 miles of pipeline across 44 states, and its NGL exports account for about a fifth of the global market.

Economic downturns can hurt upstream and downstream companies by reducing oil and natural gas prices. However, midstream pipeline companies generally aren't affected by those price swings because they simply collect the tolls on its infrastructure. That makes Energy Transfer an ideal stock to hold during these uncertain times.

Energy Transfer faced some protests from government regulators, environmental organizations, and Native American tribes over safety and territorial concerns in recent years. A major flashpoint for those conflicts was the Dakota Access Pipeline, in which Energy Transfer owns a 38.2% stake, during its construction in 2016 and 2017.

However, the Trump Administration wants domestic energy companies to ramp up their production of oil, natural gas, and other fossil fuels to reduce the country's dependence on overseas resources. The North Dakota Supreme Court also recently ordered Greenpeace, which actively protested the construction of the Dakota Access Pipeline, to pay Energy Transfer $660 million in damages. Those developments indicate that the company's toughest regulatory and environmental headwinds are dissipating.

Meanwhile, the soaring energy needs for artificial intelligence (AI) and cloud-oriented data centers should generate strong tailwinds for Energy Transfer and other pipeline companies. Energy Transfer is rapidly expanding its capacity across the Permian Basin and recently struck a deal with CloudBurst to pipe natural gas to its flagship AI-oriented data center campus in Central Texas.