Volatility has been the name of the game for the stock market so far this year. However, it hasn’t prevented the S&P 500 (SNPINDEX: ^GSPC) from chalking up a respectable gain. Some stocks have delivered especially impressive returns.
Enterprise Products Partners LP (NYSE: EPD) is definitely one of them. The pipeline stock has soared more than 20%. Its total return is even better, thanks to a juicy 5.8% distribution yield.
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How will Enterprise Products Partners perform going forward? I’ll make the call: the stock will crush the S&P 500 in the second half of 2026. Here’s exactly why.
A conflict and a potential catalyst
The ongoing Middle East conflict is my top reason for being bullish on Enterprise Products Partners. Although the U.S. and Iran have attempted several times to forge a peace agreement, the two sides can’t seem to fully get on the same page.
While continued hostilities won’t be good news for American consumers, they should drive Enterprise Products Partners’ unit prices higher. The midstream energy leader is a key player in the export of U.S.-produced oil and gas, with more than 50,000 miles of pipeline. As long as traffic through the Strait of Hormuz is disrupted, the global demand for U.S. fossil fuels will remain strong.
Enterprise is also scheduled to report its second-quarter earnings results on July 30. I view this Q2 update as a potential catalyst for the stock, with the momentum carrying through the rest of the year.
Wall Street is expecting the company to post adjusted earnings of $0.77 per unit, up 22% year over year. With the U.S. continuing to draw from its strategic petroleum reserve to export oil to international markets, my hunch is that Enterprise Products Partners could beat the consensus analyst earnings estimate.
A dissenting view
To be sure, not every Wall Street analyst is as bullish about Enterprise Products Partners as I am. Morgan Stanley (NYSE: MS) recently downgraded the stock to an “underweight” rating (which translates to a sell recommendation) and cut its 12-month price target from $43 to $40.
Should a lasting, peaceful resolution be reached between the U.S. and Iran, Morgan Stanley’s pessimistic view could prove right. Importantly, though, Morgan Stanley’s price target still reflects modest upside potential for Enterprise Products Partners despite the sell recommendation.
