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Iran-War Uncertainty Puts These 3 Midstream Stocks in Focus
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Key Takeaways
Kinder Morgan draws most earnings from take-or-pay contracts, supporting stable fee-based revenues.
MPLX generates stable cash flows from long-term shipper contracts and fee-based gathering systems.
Williams links U.S. premium basins to key markets through more than 30,000 miles of pipelines.
The overall stock market is now experiencing uncertainty stemming from the Iran war, which pushed oil prices above the $100 per barrel mark again and created lasting inflationary pressure. It is now likely that investors, most of whom are risk-averse, are looking for stocks that can sail through the uncertainty.
The uncertainty and volatility have been reflected in oil-price movements as conflicts in the Middle East continue to affect energy markets. However, not all stocks are affected by the war-induced challenges. Three midstream players, Kinder Morgan, Inc. (KMI - Free Report) , MPLX LP (MPLX - Free Report) and The Williams Companies, Inc. (WMB - Free Report) , are well-poised to gain. Let's delve deeper.
Resilient Midstream Business
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 firm carries a Zacks Rank of 3.
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 key markets. 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.
View the Zacks #1 Rank List
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Iran-War Uncertainty Puts These 3 Midstream Stocks in Focus
Key Takeaways
The overall stock market is now experiencing uncertainty stemming from the Iran war, which pushed oil prices above the $100 per barrel mark again and created lasting inflationary pressure. It is now likely that investors, most of whom are risk-averse, are looking for stocks that can sail through the uncertainty.
The uncertainty and volatility have been reflected in oil-price movements as conflicts in the Middle East continue to affect energy markets. However, not all stocks are affected by the war-induced challenges. Three midstream players, Kinder Morgan, Inc. (KMI - Free Report) , MPLX LP (MPLX - Free Report) and The Williams Companies, Inc. (WMB - Free Report) , are well-poised to gain. Let's delve deeper.
Resilient Midstream Business
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 #3 (Hold), 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 firm carries a Zacks Rank of 3.
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 key markets. 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.