We recently published a list of Jim Cramer’s Latest Portfolio: 10 Stocks to Buy and Sell. Since ONEOK Inc (NYSE:OKE) 9th on the list, it deserves a deeper look.
Jim Cramer in a new program discussed the latest major market selloff again, saying the notion the broader meltdown was because of “hard landing” fears is “totally false.” Cramer said that it was all related to the Japanese stock market and Yen, and “nothing more.”
“A bunch of money managers took advantage of how you can borrow against Japanese bonds which had a very low interest rate and then have relatively free money which you can put to work in stocks all around the globe, including here (the US),” Cramer said.
Jim Cramer said that small-cap stocks are “trying to come” back. However, he pointed to an “issue” with the small-cap rally. He said that no one actually bought individual small-cap stocks and instead loaded up on ETFs. Investors, according to Cramer, “walked away” when the broader market wavered.
For this article we watched the latest programs on Cramer recently aired on CNBC and picked 10 stocks he’s talking about. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
ONEOK Inc (NYSE:OKE)
Number of Hedge Fund Investors: 31
Jim Cramer hit the buy, buy, buy button on OKE when he was asked about the stock in a latest program. He said the company is “terrific” and “sensational.” Cramer also likes the stock’s 4.7% dividend yield.
ONEOK Inc (NYSE:OKE) is one of the biggest midstream companies in the US, managing a vast 50,000-mile network of pipelines that transport natural gas liquids (NGLs), natural gas, refined products, and crude oil. The company has strategic access to approximately half of America’s refineries, underscoring its significant industry footprint.
ONEOK Inc (NYSE:OKE) recently posted strong Q2 results. Here is what the company said about guidance during the latest earnings call:
We affirmed our 2024 financial guidance after increasing it with our first quarter earnings announcement. That increased guidance range included an expected adjusted EBITDA midpoint of $6.175 billion, with the high end at $6.325 billion. We continue to expect to meet or exceed our midpoint of $175 million in cost and commercial synergies in 2024 and expect additional annual synergies to meet or exceed $125 million in 2025. As of June 30, we had no borrowings outstanding under our $2.5 billion credit agreement. During the quarter, we extended the maturity of our revolving credit facility to June of 2028. In addition, our run rate net debt-to-EBITDA ratio was 3.36x at the end of the second quarter, in line with our long-term leverage target of 3.5x.
The management also briefly talked about data center projects:
We had 15 projects, potential projects across our footprint. Of those, there were 3 that specifically stated AI. Since then, we’ve — our number is up about to 17 on the potential power plants, and of which 5 are AI demand specifically. Approximately across our footprint, these 5 are right in the neighborhood of a Bcf per day. So again, early stages, but more to come.
ONEOK Inc (NYSE:OKE) is actively working on growth projects, including the reactivation of 3 Bcf of storage in Texas and enhancing injection capabilities in Oklahoma. These projects are on track, with the Texas storage expected to be fully operational by Q3 this year and the Oklahoma expansion by Q2 next year.
It aims for a 75-85% payout of operating cash flow after capital expenditures, with a target of 3-4% annual dividend growth. ONEOK Inc (NYSE:OKE) currently offers a dividend yield of 4.7%, with a five-year compound annual growth rate (CAGR) of 2.7% and a payout ratio of 90%. Notably, ONEOK Inc (NYSE:OKE) maintained its dividend even during the 2015 oil price crash.
Overall, ONEOK Inc (NYSE:OKE) ranks 9th on Insider Monkey’s list titled Jim Cramer’s Latest Portfolio: 10 Stocks to Buy and Sell. While we acknowledge the potential of ONEOK Inc (NYSE:OKE), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OKE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
