10 Best Infrastructure Stocks To Buy Now

5. Kinder Morgan, Inc. (NYSE:KMI)

Number of Hedge Fund Holders In Q2 2024: 41

Kinder Morgan, Inc. (NYSE:KMI) is a petroleum products infrastructure company that operates gas and refined petroleum storage and transportation assets. As of H1 2024, 58% of its revenue comes through natural gas pipelines, which means that as long as the industry is robust, the firm continues to benefit. As a result, Kinder Morgan, Inc. (NYSE:KMI)’s shares have gained a modest 26% over the past 12 months as natural gas prices have dropped. However, the future might hold promise for the firm as gas production is expected to drop in the wake of the lower prices. This means that prices might rise to allow Kinder Morgan, Inc. (NYSE:KMI) to benefit, especially since its previous locked gas contract prices were higher than the market. Additionally, its extensive gas pipeline network sets up the firm well for the growth in US liquefied natural gas (LNG) exports, 60% of which have been directed towards Europe.

Kinder Morgan, Inc. (NYSE:KMI)’s management is also seeing some demand from data centers for its gas. Here’s what it shared during the Q2 2024 earnings call:

“Let’s start with the data center demand. Utility IRPs and press releases published since 2023 reflect 3.9 Bcf a day of incremental demand, and we would expect that number to grow as other utilities update their IRPs. It’s early in the process, but we’re currently evaluating 1.6 Bcf a day of potential opportunities.

Most estimates we have seen are between 3 and 10 of incremental gas demand associated with AI. Rich took you through the 20 Bcf a day of natural gas power that Texas is contemplating, subsidizing, I should have said 20 gigawatts as well as the US projection of 133 new gas plants over the next several years. At Kinder Morgan, we’re having commercial discussions on over 5 Bcf a day of opportunities related to power demand, and that includes the 1.6 of data center demand. Certainly, not all these projects will come to fruition, but that gives you a sense of the activity levels we’re seeing and supports our belief the growth in natural gas between now and 2030 will be well in excess of the 20 Bcf a day.”