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3 Midstream Stocks That Can Ride Out Iran-War-Induced Uncertainty
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Key Takeaways
KMI, MPLX and WMB could benefit as midstream fee-based models soften Iran-war energy volatility.
KMI spans 78,000 miles of pipelines and relies on take-or-pay contracts that support stable fee revenues.
WMB's over 30,000 miles connect U.S. basins to markets, moving gas for heating and clean-energy generation.
The overall stock market is now experiencing uncertainty stemming from the Iran war, although media reports claim that the United States and Iran have reached a tentative ceasefire extension deal, which is awaiting U.S. President Donald Trump’s approval. Oil and natural gas prices, which are highly exposed to the conflict, are making the energy sector volatile. It is now likely that investors, mostly of whom are risk-averse, are looking for stocks that can sail through the uncertainty.
The uncertainty and volatility are reflected in the price of West Texas Intermediate (“WTI”) crude, which recently crossed $100 per barrel and is now hovering around $87. This shows how the war is affecting the energy market. However, not all stocks are being affected by the war-induced uncertainty. Three midstream players like Kinder Morgan, Inc. (KMI - Free Report) , MPLX LP (MPLX - Free Report) and The Williams Companies, Inc. (WMB - Free Report) are now well-poised to gain. Let's delve deeper.
Midstream Business: Resilient to Business Uncertainty
Stocks in the midstream space have lower exposure to volatility in commodity prices than oil and gas producers. This is because midstream players generate stable fee-based revenues since the transportation and storage assets are being booked by shippers for the long term. Hence, their business model is relatively low-risk, which indicates considerably less exposure to oil and gas prices and volume risks.
3 Pipeline Stocks to Gain: KMI, MPLX & WMB
Kinder Morgan: With its operating interests in oil and gas pipeline networks spread across 78,000 miles, KMI is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
MPLX: MPLX’s midstream business comprises transporting crude oil and refined products. The partnership generates stable cash flows from its long-term contracts with the shippers. Its crude oil and natural gas gathering systems also generate stable fee-based revenues. Currently, the stock carries a Zacks Rank #3 (Hold).
The Williams Companies: The company is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, The Williams Companies, with a Zacks Rank of 3, connects premium basins in the United States to the key market. WMB’s assets can meet a considerable proportion of the nation’s natural gas consumption, which is utilized for heating purposes and clean-energy generation.
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3 Midstream Stocks That Can Ride Out Iran-War-Induced Uncertainty
Key Takeaways
The overall stock market is now experiencing uncertainty stemming from the Iran war, although media reports claim that the United States and Iran have reached a tentative ceasefire extension deal, which is awaiting U.S. President Donald Trump’s approval. Oil and natural gas prices, which are highly exposed to the conflict, are making the energy sector volatile. It is now likely that investors, mostly of whom are risk-averse, are looking for stocks that can sail through the uncertainty.
The uncertainty and volatility are reflected in the price of West Texas Intermediate (“WTI”) crude, which recently crossed $100 per barrel and is now hovering around $87. This shows how the war is affecting the energy market. However, not all stocks are being affected by the war-induced uncertainty. Three midstream players like Kinder Morgan, Inc. (KMI - Free Report) , MPLX LP (MPLX - Free Report) and The Williams Companies, Inc. (WMB - Free Report) are now well-poised to gain. Let's delve deeper.
Midstream Business: Resilient to Business Uncertainty
Stocks in the midstream space have lower exposure to volatility in commodity prices than oil and gas producers. This is because midstream players generate stable fee-based revenues since the transportation and storage assets are being booked by shippers for the long term. Hence, their business model is relatively low-risk, which indicates considerably less exposure to oil and gas prices and volume risks.
3 Pipeline Stocks to Gain: KMI, MPLX & WMB
Kinder Morgan: With its operating interests in oil and gas pipeline networks spread across 78,000 miles, KMI is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
The midstream energy major, carrying a Zacks Rank #2 (Buy), is likely to grow on the back of its business model, which is relatively resilient to volume and commodity price risks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MPLX: MPLX’s midstream business comprises transporting crude oil and refined products. The partnership generates stable cash flows from its long-term contracts with the shippers. Its crude oil and natural gas gathering systems also generate stable fee-based revenues. Currently, the stock carries a Zacks Rank #3 (Hold).
The Williams Companies: The company is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, The Williams Companies, with a Zacks Rank of 3, connects premium basins in the United States to the key market. WMB’s assets can meet a considerable proportion of the nation’s natural gas consumption, which is utilized for heating purposes and clean-energy generation.