Is February a good month for buying Kinder Morgan shares?
- Kinder Morgan will continue to return value to its shareholders
- Total revenue has decreased below the expectations in Q4
- Kinder Morgan plans to increase investments in the expansion projects
Stock markets advanced this Friday, and expectations of the further stimulus also lifted crude oil prices to nearly $57 a barrel. Kinder Morgan (NYSE: KMI) shares are trading again above $14, and the technical picture implies that the price could advance above $15 this February.
Fundamental analysis: Kinder Morgan will continue to return value to its shareholders
Kinder Morgan is one of the largest energy infrastructure companies in North America that operates approximately 83,000 miles of pipelines and 144 terminals. With a mission to be a best in class operator, Kinder Morgan shares remain attractive for long term investors.
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Kinder Morgan has proven its stability during the Covid-19 pandemic, the dividend yield is around 7.4%, and the company announced that it would probably increase the dividend by 3% in 2021. The company reported Q4 results in January; total revenue has decreased by -6.9% Y/Y to $3.12B while Q3 GAAP EPS was $0.27 (beats by $0.03).
Total revenue has decreased below the expectations (beats by $60M), and the company expects to generate $2.1B in attributable net income in 2021. Kinder Morgan continues to reduce net debt, it will not have cash flow problems and maintains a strong balance sheet.
“The strength of the cash flow allows us to fund our dividend and all discretionary CapEx from internally generated funds and still have significant cash left to pay down debt and buyback shares. This remains at the core of our financial strategy and should be comforting to our shareholder base as it demonstrates our ability to return value to our shareholders even under adverse conditions as we experienced in 2020,” said Rich Kinder, Executive Chairman of Kinder Morgan.
Expectations of the further stimulus lifted crude oil prices this trading week amid a disappointing US Nonfarm payroll report. The US added just 49K new jobs in January while the unemployment rate contracted to 6.3%.
Growth-related data failed to impress, but it is important to say that there were several positive news this week that is connected with the pandemic. AstraZeneca reported that its vaccine is over 70% effective, while Johnson and Johnson announced its vaccine should be roughly 66% effective in preventing contagions.
This brought some confidence among speculative interest, and as more people get vaccinated, economic activities will start to recover, which is driving investor sentiment. Kinder Morgan expects a successful 2021, and the company plans to increase investments in the expansion projects.
Technical analysis: Kinder Morgan shares remain attractive for long-term oriented investors.
The current support levels are $14 and $13; $15 and $16 represent the resistance levels. If the price jumps above $15, it would be a signal to buy shares, and the next target could be around $16.
On the other side, if the price falls below the $13 support level, it would be a firm “sell” signal, and we have an open way to $12.
Kinder Morgan shares are trading again above $14 support as expectations of the further stimulus lifted crude oil prices. Kinder Morgan has proven its stability during the Covid-19 pandemic, and shares of this company remain attractive for long-term oriented investors.
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