10 Best Natural Gas Stocks To Invest In According to Hedge Funds

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

Number of Hedge Fund Holders: 41

Kinder Morgan, Inc. (NYSE:KMI) is a leading energy infrastructure company in North America, playing a crucial role in natural gas transportation and storage, making it one of the top natural gas stocks to invest in according to hedge funds. As of Q2 2024, 41 hedge funds held shares in the company, down slightly from 43 in the previous quarter, highlighting its steady attractiveness among institutional investors.

The company operates approximately 82,000 miles of pipelines and 139 terminals, making it a significant player in the natural gas sector. Kinder Morgan, Inc. (NYSE:KMI) Q2 2024 earnings call highlights its robust business model, with a focus on the growing demand for natural gas, driven by increased LNG exports and the rising energy needs of data centers. Despite missing its earnings expectations slightly, with reported EPS at $0.25 compared to the expected $0.26, the company’s fundamentals remain strong.

During the quarter, Kinder Morgan, Inc. (NYSE:KMI) experienced growth in its natural gas segment, with adjusted EPS increasing by 4% and EBITDA rising by 3%. This performance was driven by increased transport and storage of natural gas, alongside steady growth in refined products. The company also maintains a healthy debt-to-EBITDA ratio of 4.1, indicating strong financial discipline. Additionally, Kinder Morgan continues to reward its shareholders, announcing a dividend of $0.2875 per share.

A key driver for the company’s future growth is the anticipated surge in natural gas demand, particularly in power generation for data centers and AI-driven industries. With projections of over 133 new gas plants being added in the U.S. over the coming years, Kinder Morgan, Inc. (NYSE:KMI) is well-positioned to benefit from this expansion. The company is actively involved in commercial discussions for over 5 billion cubic feet per day (Bcf/d) of opportunities related to natural gas power demand, underscoring its strategic advantage in the market.

Furthermore, Kinder Morgan, Inc. (NYSE:KMI) project backlog increased by $1.9 billion, reaching $5.2 billion in Q2 2024, driven by the South System 4 Expansion project. This initiative, which aims to increase capacity by 1.2 Bcf/d, will help meet growing demand in the Southeastern U.S., solidifying Kinder Morgan, Inc. (NYSE:KMI) leadership in the natural gas infrastructure sector.