UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

27. ONEOK, Inc. (NYSE:OKE)

Number of Hedge Fund Investors In Q2 2024: 34

Sector: Energy

ONEOK, Inc. (NYSE:OKE) is an American midstream oil and gas company that deals with natural gas and liquefied natural gas (LNG). The firm gathers, stores, processes, and sells natural gas and associated fuels. However, despite the fact that the natural gas industry in the US has faced weakness in 2023 due to lower prices and excess supply, ONEOK, Inc. (NYSE:OKE)’s shares have gained 31.5% year to date. These gains have been influenced by a robust acquisition strategy which has seen the firm grow its operations by acquiring two midstream firms. Analysts expect that the deals have the potential to add up to $2 billion to ONEOK, Inc. (NYSE:OKE)’s operating income and grow its free cash flow by 20% by 2028. As a result, the share price gains reflect the growing optimism surrounding the firm. On a macro front, continued recovery in the natural gas market can create tailwinds for ONEOK, Inc. (NYSE:OKE), while an economic slowdown can generate headwinds.

ONEOK, Inc. (NYSE:OKE)’s management commented on its acquisitions during the Q3 2024 earnings call:

“Our stand-alone 2024 adjusted EBITDA guidance, which excludes contributions from EnLink and Medallion, is well over double ONEOK’s adjusted EBITDA just five years ago. This extraordinary growth has been possible because of our employees’ focus on excellence, service and innovation, our strategic assets and our intentional and disciplined approach to organic growth and acquisitions. It has been more than a year since we completed the acquisition of Magellan, and we continue to identify synergy opportunities related to the transaction exceeding our original expectations. In mid-October, we completed our acquisition of the controlling [indiscernible] EnLink Midstream. And today, I’m able to announce the expiration of the Hart-Scott-Rodino Act waiting period related to the Medallion acquisition.

We look forward to finalizing that acquisition in the coming days. The EnLink and Medallion acquisitions continued to build off the complementary assets of ONEOK, providing significant growth potential by establishing a fully integrated Permian Basin platform at scale that will drive new service offerings for our customers. Expanding and extending ONEOK’s footprint in the Mid-Continent and North Texas, providing a new asset position in Louisiana connected with the key demand centers providing significant synergies through connections of complementary asset positions and finally, delivering immediate accretion in supporting our capital allocation strategy. These acquisitions mark another exciting milestone in our company’s history, building on our proven track record of shareholder value creation.”