Image: BigstockDuring the initial phase of the pandemic, when vaccines were unavailable, the world faced significant uncertainties. Crude oil prices experienced an unprecedented plunge, dropping to a negative $36.98 per barrel on April 20, 2020.However, the rapid development and rollout of vaccines facilitated the gradual reopening of economies, leading to a remarkable recovery in the pricing of West Texas Intermediate (WTI) crude oil, which soared to $123.64 per barrel by March 8, 2022. Oil price data are per the U.S. Energy Information Administration.Recently, WTI crude oil has been trading at more than $70 per barrel. This highlights the inherent exposure of most energy companies to extreme volatility in commodity prices. Therefore, it is prudent for investors to keep an eye on midstream stocks, such as Kinder Morgan, Inc. (KMI – Free Report), MPLX LP (MPLX – Free Report), and The Williams Companies, Inc. (WMB – Free Report).
Fueling Resilience: The Power of Midstream Business
Although the fate of energy players is highly dependent on oil and gas prices, 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 Must-Watch Stocks
We have employed our Stock Screener to zero in on three stocks belonging to the midstream energy space that are well-poised to gain, and hence, investors should keep an eye on these stocks. All of these stocks maintain Zacks Rank #3 (Hold) ratings.
Kinder Morgan
With its operating interests in oil and gas pipeline networks spread across 83,000 miles, Kinder Morgan 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.Kinder Morgan is poised to grow due to its business model, which is relatively resilient to volume and commodity price risks. These positive developments are reflected in the stock’s upward earnings estimate revisions for 2025 in the past 30 days.
MPLX LP
This firm has ownership and operating interests in midstream energy infrastructure and logistics assets, generating stable cashflow. The partnership has a strong focus on returning capital to unit holders. Under its unit repurchase authorization, the partnership has yet to buy back the remaining $620 million of its units. In 2025, MPLX LP will likely see earnings and sales growth of 2.4% and 4.5%, respectively.
The Williams Companies
This 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 connects premium basins in the United States to the key market. The company’s assets can meet 30% of the nation’s natural gas consumption, which is utilized for heating purposes and clean-energy generation. These positive developments are reflected in the stock’s upward earnings estimate revisions for 2025 in the past 30 days.More By This Author:Garmin Laps The Stock Market: Here’s WhyApple Stock Falls Amid Market Uptick: What Investors Need To Know2 Internet Stocks To Buy For Breakout Sales Growth: DASH, SE
