On Apr 3, we upgraded
Kinder Morgan Inc.
) from a Neutral to an Outperform recommendation, anticipating
its performance to be better than the broader market.
Why the Upgrade?
Texas-based Kinder Morgan is one of the largest midstream
energy companies in North America, operating approximately 75,000
miles of pipelines transmitting natural gas, refined petroleum
products, crude oil, carbon dioxide and additional products. It
has more than 180 terminals that store petroleum products and
chemicals, as well as ethanol, coal, petroleum coke and
We expect Kinder Morgan to capitalize on attractive investment
opportunities in the near term, particularly in the Eagle Ford
and Haynesville shale plays. The company continues to profit from
the performance of its publicly traded limited partnership,
Kinder Morgan Energy Partners, L.P.
). The partnership's contribution to KMI's distribution is
immense given KMP's stable and incremental cash flow from
diversified assets in virtually all types of market
During the fourth quarter, Kinder Morgan improved its revenues
and earnings on an annual basis, buoyed by higher volumes in most
of its businesses. The company's growth curve is expected to be
driven by its incentive distribution rights ownership of the
general partners of both Kinder Morgan Energy Partners and El
Kinder Morgan intends to invest about $3 billion in expansion
and acquisitions in 2013. Increased exploration and production
volumes along with continuous expansion of the Transmountain oil
pipeline, terminal volume growth and upcoming projects would also
enhance shareholder value.
Solid growth prospects have raised optimism for even better
results for Kinder Morgan in the years ahead. The Zacks Consensus
Estimate for 2013 now stands at $1.24 per share, while the
estimate for 2014 is pegged at $1.43.
Other Stocks to Consider
Kinder Morgan currently has a market capitalization of $39.2
billion. Other stocks to watch out for in the industry are
Zacks Rank #1 (Strong Buy) and
Oiltanking Partners, L.P.
) - Zacks Rank #2 (Buy).
KINDER MORGAN (KMI): Free Stock Analysis
KINDER MORG ENG (KMP): Free Stock Analysis
OILTANKING PTNR (OILT): Free Stock Analysis
SEMGROUP CORP-A (SEMG): Free Stock Analysis
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