Is Targa Resources Corp. (TRGP) the Best American Energy Stock to Buy Now?

In the ever-evolving landscape of the energy sector, investors are constantly on the lookout for the next big opportunity. One company that has been making waves recently is Targa Resources Corp. (TRGP). With a strong financial performance and strategic investments, TRGP is positioning itself as a leader in the natural gas utilities sector. But is it the best American energy stock to buy now? Let's dive into the details to find out.

Financial Performance: A Standout in the Sector

Targa Resources Corp. reported a record full-year 2024 adjusted EBITDA of $4.1 billion, a 17% increase from 2023. This impressive growth is a testament to the company's operational efficiency and strategic investments. The fourth-quarter 2024 adjusted EBITDA of $1.12 billion also marked a 5% sequential increase from Q3 2024, driven by higher volumes in gathering, processing, and logistics.

Record Volumes and Strategic Expansion

One of the key drivers of TRGP's success is its strategic expansion in the Permian Basin. The company reported record Permian natural gas inlet volumes in 2024, supported by new infrastructure like the 275 MMcf/d Greenwood II plant in Midland and the Bull Moose plant in the Delaware Basin. These projects enhance its position in the prolific Permian Basin, a key shale play.

In addition to its Permian operations, TRGP has also made significant investments in NGL and LPG infrastructure. The company achieved record NGL transportation, fractionation, and LPG export volumes in 2024. The newly completed 120 MBbl/d Train 10 fractionator and planned 150 MBbl/d Train 12 in Mont Belvieu, along with the Delaware Express pipeline expansion and GPMT LPG Export Expansion, position TRGP to capitalize on rising demand for NGLs and LPG exports.

Dividend Growth and Share Buybacks

TRGP's commitment to shareholder value is evident in its dividend growth and share buybacks. The company announced an annualized dividend of $4.00 per share for 2025, up from $3.00 in 2024. This reflects confidence in cash flow stability, with $164 million paid in Q4 2024 dividends.

In addition to dividends, TRGP executed $755 million in common share repurchases in 2024, including $108 million in Q4. As of December 31, 2024, $1.015 billion remained under its repurchase programs, signaling continued shareholder-friendly policies.

Robust Capital Allocation and Growth Pipeline

TRGP plans $2.6–2.8 billion in net growth capital expenditures for 2025, targeting projects like the Delaware Express pipeline, Train 12 fractionator, and GPMT LPG Export Expansion. These investments align with long-term demand for energy infrastructure. Management forecasts 2025 adjusted EBITDA of $4.65–4.85 billion, a 15% increase over 2024, driven by these expansions and higher utilization of existing assets.

Competitive Advantage and Market Outperformance

TRGP's revenue growth of 3.91% in Q4 2024 exceeded the sector's average of 3.53%, and its 15.74% YoY net income growth outpaced peers' average of 13.15%. This reflects superior profitability and market share gains. TRGP's stock rose 2.54% on April 8, 2025, outperforming the S&P 500 (down 0.23%) and Dow Jones (down 0.91%), highlighting investor confidence in its resilience amid market volatility.

Liquidity and Debt Management

Despite $14.17 billion in total debt as of December 31, 2024, TRGP maintains strong liquidity with $1.015 billion remaining in share repurchase capacity and robust EBITDA coverage. The refinancing of $1.8 billion in preferred equity for Targa Badlands LLC further strengthens its balance sheet.

Conclusion

Targa Resources Corp.'s record EBITDA growth, strategic infrastructure expansions, dividend and buyback discipline, and outperformance relative to peers make it a compelling investment in the energy market. Its focus on high-demand sectors like Permian production, NGL logistics, and LPG exports aligns with global energy trends, supported by solid financial metrics and a clear growth roadmap. While no investment is without risk, TRGP's strong fundamentals and strategic vision position it as a top contender in the American energy sector.