The Clock May Be Ticking on Energy Transfer Stock Trading Under $20 -- Should You Buy Now?

Energy Transfer (NYSE: ET) is off to a strong start in 2026, with shares trading up 13%.

Because it is one of the largest midstream companies in North America, Energy Transfer stands to benefit from rising energy demand from data centers, a revenue catalyst that could send the stock price even higher.

If that expanding demand starts turning into more revenue, Energy Transfer shares may not trade under $20 for long.

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Growing natural gas demand

There are various market projections and differing time frames regarding the size of the data center market. Grand View Research forecasts it will be a roughly $902 billion global market by 2033, while Fortune Business Insights projects it will be around $699 billion by 2034.

The range isn't what's important to focus on; the key is that data center expansion is expected to rapidly pick up, which means so too will the energy needs involved with powering them. Currently, natural gas is the third-largest source of electricity for data centers globally, according to the International Energy Agency (IEA).

With 140,000 miles of pipeline and related infrastructure, Energy Transfer has what it needs to make plenty of natural gas deals, which it has been doing. In terms of name recognition, one of its biggest agreements is with Oracle, under which it supplies the cloud and software company with natural gas for three of its data centers.

It also has a 20-year agreement with Entergy Louisiana, a subsidiary of Entergy, in which it will fuel Entergy's power plants. "Entergy's power plants support critical projects like Meta Platforms' upcoming hyperscale AI data center in Richland Parish," the company said in a press release.

What to watch for next

Several projects could be up and running for Energy Transfer this year, so any updates on those will be something to watch for in its upcoming Q1 2026 earnings results, which are expected on May 5.

Looking at how to value the company, its forward price-to-earnings ratio of 11.3 seems fair, if not slightly undervalued, given data center expansion and natural gas demand. Energy Transfer also has a low beta, so it's less volatile than the broader market, and it offers a dividend that yields just under 7%.

A risk for Energy Transfer is that data center expansion doesn't happen as quickly as expected, which could lead to less natural gas demand from that newer revenue source. But if Energy Transfer can show continued momentum in its upcoming earnings report, the stock may not stay under $20 for long. It's a fair time to consider starting a position.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Entergy, Meta Platforms, and Oracle. The Motley Fool has a disclosure policy.