Targa Resources: From Commodity Exposure To Fee-Based Stability

Summary

• Over the past decade, Targa has transformed into a fee-based midstream operator. The company’s growth is driven by expanding assets in the Permian Basin, increasing processing capacity, and enhancing infrastructure.
• Despite its focus on fee-based revenue, strong cash flow, and capital allocation, I have some concerns about its high reinvestment rate, high debt-capital ratio, and low cash position.
• TRGP is well-positioned for long-term stability and growth. However, my valuation showed that there is no margin of safety at the current market price.