Prospects are improving and the 6% dividend yield is very attractive
Kinder Morgan Inc. (KMI, Financial) is a prominent energy
infrastructure company in North America and is one of the largest operators of
natural gas pipelines in the region.
When a polar vortex crippled the power grid in February and
halted gas supplies, causing rates to skyrocket to unimaginable heights, gas
and electricity sellers and distributors across Texas suffered billions of
dollars in damages. Kinder Morgan and companies such as Comstock Resources Inc.
(CRK, Financial), however, profited handsomely on the other side of the trade
thanks to higher gas prices.
In addition to its North American business, the company is
laying the groundwork to become a leading liquified natural gas exporter as
well, which could pay lucrative returns in the future.
Even though there is an overall decrease in oil and natural
gas consumption today, the expected recovery of the global economy in the
second half of this year will restore some lost demand, paving the way for
Kinder Morgan to report strong earnings growth.
Shares have gained 19% in the last 12 months, but still seem
undervalued in my opinion considering the improving prospects for the energy
industry. Let's take a look at my reasons for thinking this way.
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