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Prediction: These 2 Stocks Will Thrive Under Trump's Energy Plan

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Under President Donald Trump, there has been a big shift in energy policy in the U.S. Instead of incentivizing green energy technologies such as solar and wind, the current administration is focused on increasing American energy production and infrastructure.

The administration is particularly focused on natural gas, with Energy Secretary Chris Wright recently touting its importance at the annual CERAWeek conference. That's good news for companies involved in the pipeline space, as these are volume-driven businesses.

Let's look at two stocks that should thrive under the current administration's energy plan.

Transition to growth mode

Energy Transfer (NYSE: ET) and Enterprise Products Partners (NYSE: EPD) operate two of the largest integrated midstream systems in the U.S., where they transport, store, and upgrade various hydrocarbons, such as crude, natural gas, NGLs (natural gas liquids), and refined products. Both companies have expansive systems that transverse a sizable portion of the country, but they both have particularly strong presences in the Permian Basin, Texas, and around the Gulf Coast.

Both of these companies also have largely fee-based, volume businesses, and they both like to include take-or-pay or volume commitments in their contracts when they can. Approximately 90% of Energy Transfer's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) comes from fee-based businesses, while Enterprise has said that about 80% of its cash flow is fee-based.

Energy Transfer also runs a large arbitrage business, where it is able to take hydrocarbons like natural gas to higher-priced regions, store them until more seasonally favorable times (natural gas prices tend to be higher in winter), or upgrade NGLs to a more valuable product when spreads are favorable.

The combination of a more favorable government energy policy and increasing energy needs stemming from artificial intelligence (AI) have led both Energy Transfer and Enterprise to transition into growth mode, given the attractive opportunities in the midstream space.

Energy Transfer is leading the way, announcing it will spend $5 billion on growth projects this year, which is a big increase from the $3 billion it spent last year. Much of this spending will be centered around the Permian Basin, anchored by its Hugh Brinson Pipeline, which will take natural gas away from the Permian and connect to Energy Transfer's intrastate natural gas pipeline network to help support rising demand from power companies and data centers in Texas.