Mining Market Watch Journal

Sector Insight & Corporate Overviews

of Quality Mining and Energy Companies

Valuation Commentary: Targa Resources Corp. (NYSE: TRGP) is a leading provider of midstream services and is one of the largest independent midstream infrastructure companies in North America. Its core market is Texas’ Permian Basin, where it has over 14,000 miles of pipelines.
 
The shares have been on fire over the past year, more than doubling, and they continue to trend higher.
 
It’s not hard to see why.
 
Targa had a fantastic 2024. It delivered a record $1.1 billion of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) during the third quarter alone.
 
It also finished several expensive capital projects. This helps the company in two ways.
 
To start, the new projects will boost revenues, which are expected to be about 19% higher this year.
 
Beyond that, the completion of the capital projects free up cash that was previously being plowed into construction.

 
Between the higher revenues and the lower cash drag, the company was already confident enough to boost its dividend payout by 33% for 2025.

 
There’s also a political angle here.
 
The Biden Administration was openly hostile to oil and gas companies for nearly the entire four years of its existence. It chose to go all-in on green energy.

   
Trump was far friendlier to oil and gas companies in his first term. I don’t expect that to be different this time around. Less regulatory hostility should give Targa a nice, long runway for additional growth.
 
The trading desk at Market Equities Research Group expects the next four years to be fantastic for midstream pipeline operators.

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