Stocks that return more than 40% one year usually have a tough time repeating such a strong performance the next. One likely exception for 2022 is Energy Transfer LP (ET), a major owner of North American pipelines and other energy infrastructure.

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Shares returned about 43 percent in 2021, as the company proved its resilience by generating some $5.5 billion in free cash flow after capital spending and dividends to pay down debt. That was despite generally tepid system volumes and lower returns on expiring contracts, as North American oil and gas producers used free cash flow to pay off debt rather than ramp up output.

Upside catalyst number one for Energy Transfer shares in 2022 is at least a modest recovery in the company’s system volumes. At this point, most producers still appear to favor directing free cash flow to further debt reduction, higher dividends, stock buybacks and even alternative energy investments. But their lack of investment coupled with recovering demand is the formula for continued higher prices.

And we believe that will eventually induce even the more conservative to turn up the taps a bit this year, in turn heating up investor sentiment for midstream stocks that have so far in this energy cycle badly lagged producers.

Even if higher volumes take longer to materialize than we expect, Energy Transfer is set to realize considerable upside from last year’s acquisition of the former Enable Midstream Partners. Management has cited $100 million in annual cost synergies likely to be realized over the next year or so. Those savings are expected to expand even as volumes recover to fill already constructed capacity.

The Enable merger is a big reason management has forecast a return to dividend growth and stock buybacks this year, in addition to aggressive debt reduction. A payout boost would be off a very safe yield of nearly 7 percent that distributable cash flow currently covers by better than a 3-to-1 margin and free cash flow after CAPEX covers better than 4-to-1.

Energy Transfer is likely to face more regulatory scrutiny the next few years, now that President Biden has locked in Democrats’ 3-2 Federal Energy Regulatory Commission majority.

The company already faces high profile fines and may have to pay $410 million to Williams Companies (WMB) for a scuttled 2016 merger attempt. But it also looks like the government will find a way to keep the company’s Dakota Access Pipeline open. And plugging methane leaks per federal edict should ultimately improve efficiency.

I expect to see the stock make an early 2022 assault on last year’s mid-June high of $11.55 per share, followed by a return to pre-pandemic levels in the low teens. Energy Transfer is a buy up to $15.