Estimated read time: 4 minutes
Publication date: 23rd Mar 2022 10:32 GMT+1
The Russia-Ukraine conflict doesn’t seem to be slowing down. It has caused a surge in oil prices and inflation. So, purchasing midstream stocks in these times can offer a myriad of advantages as they are well-positioned to navigate inflationary environments and have contracts that are often indexed to inflation.
Here, we take a look at three midstream stocks investors can buy right now.
Marathon Petroleum Corporation
Marathon Petroleum (NYSE: MPC) is one of the better-valued midstream stocks. With a market capitalization of $46.6 billion, this Ohio-based midstream organization is one of the largest wholesale suppliers of gasoline and distillates in the country.
It is independently engaged in the refining, marketing, and transportation of petroleum and has about 13 refineries in the regions across the mid-Continent, west coast, and Gulf Coast where it can refine up to 2.9 million barrels of crude per day. The shares of this company have soared close to 50% in the past 12-months and more than 20% year to date. It also pays investors a quarterly dividend of $0.58 per share, indicating a yield of almost 3%.
Marathon Petroleum reported earnings per share of $1.30 in its fourth quarter of 2021 beating the market estimates while simultaneously increasing its revenue by 96% year-over-year.
Moreover, it disclosed a partnership with Nestle to convert the Martinez refinery in California to a renewable fuel production unit for the purpose of extracting renewable diesel from residues. With this move, the company will be the only global provider of renewable products having a production footprint across the regions of North America, Asia, and Europe.
Kinder Morgan (NYSE: KMI) is a leader in the natural gas storage and transportation segment and is one of the largest energy infrastructure companies in North America. The ongoing conflict between Russia and Ukraine has acted as a tailwind for Kinder Morgan.
Several countries have imposed sanctions on Russia which is one of the largest exporters of oil in the world, allowing Kinder Morgan to benefit from the short-term disruption.
Though Kinder Morgan does not possess any path-breaking technology, its infrastructure makes the company an important player. Its shares have gained close to 15% since March 2021 and more than 10% year-to-date.
Kinder Morgan has improved over the years and aligned itself with its shareholder’s goals. Last year it made two significant acquisitions that gave it exposure to the renewable natural gas segment.
The company has generated some solid cash flows last year which are sufficient to fund its future growth objectives largely. Kinder Morgan stock currently offers investors a tasty dividend yield of 6% making it attractive to income investors.
HollyFrontier (NYSE: HFC) produces gasoline, diesel fuel, jet fuel, lubricants, and asphalt and operates four complex oil refineries having a total crude oil processing capacity of 405,000 barrels per stream day. The company also offers crude oil transportation, storage, and throughput services to petroleum companies around the world.
Though it generated a wider-than-expected quarterly loss in Q4, due to the U. refinery facing heavy refining maintenance and weather-related downtime, the market expects it to post sales between $4.08 billion to $5.38 billion for the current fiscal quarter while having a positive year-over-year growth rate of 37.7%.
One notable factor is the improvement in its refinery operations which can help the company immensely in today’s market scenario. HollyFrontier Corporation’s adjusted EBITDA of its refining unit had helped the company in reversing its year-ago quarter loss of $111.5 million while at the same time improving its refinery gross margin levels by 116% to $8.70 per barrel.
Further, its Lubricants and Specialty Products segment has also improved following the strong base oil margins. This means in the current environment, where the oil prices are on a fleak, is perfect to improve the company’s operations.
The above-mentioned stocks will make a great buy in the current turbulent times. So, anyone who wants to invest their hard-earned monies can consider any of these for their portfolios.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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