Is Targa Resources (TRGP) Well Positioned to Grow?

Oakmark Funds, advised by Harris Associates, released its “Oakmark Equity and Income Fund” Q2 2025 investor letter. A copy of the letter can be downloaded here. The equity portfolio returned 4.67% in the second quarter compared to 10.94% for the S&P 500 Index. An underweight in technology stocks and an overweight in value and mid-cap stocks led to the underperformance of the fund. The fixed income portfolio returned 1.97% compared to 1.21% for the Bloomberg U.S. Aggregate Bond Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second quarter 2025 investor letter, Oakmark Equity and Income Fund highlighted stocks such as Targa Resources Corp. (NYSE:TRGP). Targa Resources Corp. (NYSE:TRGP) owns, operates, acquires, and develops a portfolio of complementary domestic infrastructure assets. The one-month return of Targa Resources Corp. (NYSE:TRGP) was 1.66%, and its shares gained 27.92% of their value over the last 52 weeks. On July 14, 2025, Targa Resources Corp. (NYSE:TRGP) stock closed at $172.46 per share with a market capitalization of $37.412 billion.

Oakmark Equity and Income Fund stated the following regarding Targa Resources Corp. (NYSE:TRGP) in its second quarter 2025 investor letter:

"Targa Resources Corp. (NYSE:TRGP) is a leading midstream natural gas and natural gas liquids (NGL) company. Targa is a part of a group that controls 90% of the fractionation capacity in the largest hub for NGLs in the world, known as Mont Belvieu. Thanks to the region's unique topography and proximity to the Gulf Coast, Targa benefits from meaningful cost advantages and significant barriers to entry. We like that Targa generates ~90% of its earnings through multi-year fee-based arrangements with its customer base, which provides protection against oversupply or re contracting. Uncertainty around Permian oil pro duction growth has recently weighed on share price. However, in our view, Targa remains well-po sitioned to grow, even if the Permian slows dramatically. We were happy to purchase shares at a dis count to peers based on normalized earnings power and our estimate of intrinsic value."

Targa Resources Corp. (NYSE:TRGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held Targa Resources Corp. (NYSE:TRGP) at the end of the first quarter, which was 61 in the previous quarter. While we acknowledge the potential of TRGP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Targa Resources Corp. (NYSE:TRGP) and shared the list of best high growth dividend stocks. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.