Dj Kinder Morgan Inc. Stock Falls Friday, Underperforms Market

The Oil/Energy market has been highly volatile, recently dropping below $70 per barrel. Concerns over weaker global demand, lackluster Chinese economic stimulus, and a surging U.S. dollar have weighed on market sentiment. On Thursday, Brent crude settled at $74.23 a barrel, while WTI finished at $70.10 — both still down on a year-to-date basis. Analysts warn that the planned production increases of OPEC+ could further depress prices, despite geopolitical uncertainties.

High-Yield Stocks: A Cushion for Investors

In times of oil market instability, high-yield large-cap stocks — defined as companies with a market capitalization of $10 billion or more — provide a haven for investors seeking stable returns. These stocks often offer attractive dividends, offsetting losses from commodity fluctuations. With their proven resilience and steady cash flow, they can mitigate market risks, ensuring a more balanced portfolio during volatile periods.

Canadian Natural Resources Limited CNQ, Chevron CVX and Kinder Morgan KMI stand out as compelling choices for investors seeking large-cap energy exposure.

CNQ, CVX and KMI Dividend Yield

Why Size Matters

These companies are financially strong, well-regarded, and widely covered by analysts. Their regular dividend payments make them particularly attractive to income-focused investors. For those seeking stability and a proven track record, large-cap firms hold strong appeal.

Although large-cap stocks may not match the growth potential of smaller companies, they offer greater price stability. This makes them an ideal choice for a steady approach without the sharp fluctuations often tied to commodity prices.

Our Choices

Canadian Natural Resources: It is one of the largest independent energy companies in Canada. The company is engaged in the exploration, development and production of oil and natural gas. Canadian Natural Resources boasts a diversified portfolio of crude oil (heavy as well as light), natural gas, bitumen and synthetic crude oil.

The Calgary-based CNQ beat the Zacks Consensus Estimate for earnings in three of the last four quarters, the average being 3.9%. Canadian Natural has a market capitalization of roughly $71.3 billion.

A major incentive for holding the CNQ stock is dividend. With a quarterly payout of 56.25 Canadian cents, CNQ shares currently yield 4.5% annually, well above the Zacks Oil/Energy sector average of 3.7%. Reflecting a shareholder-friendly nature, the Zacks Rank #3 (Hold) company recently hiked its payout by 7%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chevron: Based in San Ramon, CA, Chevron is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing.

Chevron beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The #3 Ranked company has a market capitalization of roughly $289.9 billion.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

With a quarterly payout of $1.63 per share, the CVX stock has a 4% dividend yield, above the generous sector average and significantly over the S&P 500’s 1.2% average.

Kinder Morgan: Houston, TX-based Kinder Morgan is a leading midstream energy infrastructure provider in North America. The company operates pipelines across 83,000 miles to transport natural gas, crude oil, condensate, refined petroleum products, CO2 and other products.

Kinder Morgan, carrying a Zacks Rank of 3, is valued at some $62.2 billion. The energy infrastructure provider‘s 2024 earnings per share indicate 9.4% year-over-year growth.

KMI pays out a quarterly dividend of 28.75 cents, which gives it a 4% yield at the current stock price.

Zacks Investment Research

Kinder Morgan (KMI) closed at $28.54 in the latest trading session, marking a +1.93% move from the prior day. The stock's change was more than the S&P 500's daily gain of 0.53%. Meanwhile, the Dow experienced a rise of 1.06%, and the technology-dominated Nasdaq saw an increase of 0.03%.

Shares of the oil and natural gas pipeline and storage company witnessed a gain of 13.04% over the previous month, beating the performance of the Oils-Energy sector with its gain of 3.73% and the S&P 500's gain of 1.02%.

The investment community will be paying close attention to the earnings performance of Kinder Morgan in its upcoming release. The company's upcoming EPS is projected at $0.33, signifying a 17.86% increase compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $3.97 billion, reflecting a 1.7% fall from the equivalent quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.17 per share and revenue of $15.15 billion, indicating changes of +9.35% and -1.17%, respectively, compared to the previous year.

Investors should also take note of any recent adjustments to analyst estimates for Kinder Morgan. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 1.12% lower within the past month. At present, Kinder Morgan boasts a Zacks Rank of #3 (Hold).

Looking at valuation, Kinder Morgan is presently trading at a Forward P/E ratio of 23.85. For comparison, its industry has an average Forward P/E of 17.31, which means Kinder Morgan is trading at a premium to the group.

We can also see that KMI currently has a PEG ratio of 3.88. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The average PEG ratio for the Oil and Gas - Production and Pipelines industry stood at 3.22 at the close of the market yesterday.

The Oil and Gas - Production and Pipelines industry is part of the Oils-Energy sector. Currently, this industry holds a Zacks Industry Rank of 163, positioning it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.

Zacks Investment Research

U.S. natural gas prices are on fire this month, surging by about 50% to reach $3.40 per million British thermal units as of Nov. 21, the highest level in over a year.

November is poised to mark the strongest surge in natural gas at the Henry Hub pricing point since July 2022, fueled by heightened geopolitical tensions, unseasonably cold U.S. weather and rising export demand.

For investors, this sharp price rebound has cast a spotlight on natural gas stocks poised to benefit from the renewed momentum in the natural gas markets.

Why Are Natural Gas Prices Spiking?

The price rally has been driven by a combination of factors:

• Plunging Temperatures Across the U.S.: After a relatively warmer-than-average start to the winter, the situation has drastically changed over the past few weeks. The National Oceanic and Atmospheric Administration forecasts the first major snowfall of the season for parts of the central and northern Appalachians, with lower elevations in Pennsylvania and New York also bracing for accumulation. This colder weather has pushed demand for heating sharply higher.
• Geopolitical Tensions Between Russia and Ukraine: Russia's launch of an intercontinental ballistic missile on Thursday, combined with Ukraine’s recent use of Western-made missiles to target Russian territory, has added a geopolitical risk premium to natural gas markets.
• Supply Concerns in Europe: Austria’s OMV Group revealed earlier this month that it will stop receiving natural gas volumes from Russia’s Gazprom, reigniting fears of winter supply shortages in Europe and potentially shifting demand to the U.S. for liquefied natural gas (LNG) exports.

7 Natural Gas Stocks Benefiting From The Rally

As natural gas prices rally, several U.S. energy companies stand to gain from higher commodity prices and increased demand. Here are seven stocks to watch:

1. EQT Corporation

EQT is the largest natural gas producer in the U.S., with operations in the Appalachian Basin. The company benefits directly from higher domestic gas prices.

Shares of EQT Corp. are up 30% month-to-date, on track for their strongest performing month since March 2022.

2. ONEOK, Inc.

As a midstream operator, ONEOK processes and transports natural gas, profiting from higher pipeline volumes as demand increases.

Shares of ONEOK Inc. are up 19.6% in November, eyeing their best monthly performance since November 2020.

3. Targa Resources Corp.

Targa specializes in natural gas gathering and processing, positioning it to benefit from both domestic demand and export growth.

Targa shares have rallied 24% this month, on track to notch the 10th straight positive month and the strongest one in four years.

4. Kinder Morgan, Inc.

One of the largest pipeline operators in the U.S., Kinder Morgan’s infrastructure is critical for natural gas transportation across regions.

Kinder Morgan has seen its stock rally 16% in November, potentially positioned for the best month since November 2020.

5. Antero Resources Corporation

Focused on natural gas and liquids production, Antero Resources has significant exposure to the Appalachia region, where colder weather is driving demand.

Shares of Antero Resources have soared 32% month-to-date, following a 9.7% drop in October.

6. Cheniere Energy, Inc.

As the top exporter of liquefied natural gas from the U.S., Cheniere benefits from global demand for natural gas, particularly in Europe.

Cheniere Energy has gained 16% thus far this month.

7. Williams Companies, Inc.

Williams operates natural gas infrastructure and transmission pipelines, playing a vital role in connecting supply to end markets.

Shares are up 13.6% in November, following a 14.7% surge in October.

Chart: US Natural Gas Stocks Rallied In November