We are currently experiencing intermittent difficulty during Premium user registration. We appreciate your patience as we investigate.

Why is Enbridge so Cheap?

Investors underestimate how long legal battles last.

Andrew Willis 4 June, 2021 | 4:29AM
Facebook Twitter LinkedIn



Andrew Willis: Each week we talk about a stock that we think is either too cheap or too expensive – and why!

Let’s talk about a rare triple threat – Enbridge. This Canadian Oil and Gas major has a wide moat, pays out decent dividends, and is very undervalued. But why?

Part of it is pipelines. There are worries about a potential shut down of a section of the cross-border Line 5 pipeline. The governor of Michigan had until May 12th to shut it down – and well, it’s still running. The stock price has been falling since that deadline, but we’re maintaining our fair value estimate and wide moat rating – because we believe that until the dispute is resolved, the oil continues to flow.

Sector strategist Stephen Ellis notes that the potential economic impact, loss of jobs, and product supply issues will need to be addressed before we see a shutdown. And besides, Enbridge has already started work on replacing that section of the pipeline…

For Morningstar, I’m Andrew Willis.

Passionate about Investing in New Ideas?

Explore the latest Global Thematic Fund Landscape report here

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Enbridge Inc53.31 CAD-0.54Rating

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.


© Copyright 2022 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy