We recently compiled a list of the 10 Best Robinhood Stocks Under $20. In this article, we are going to take a look at where Kinder Morgan, Inc. (NYSE:KMI) stands against the other Robinhood stocks.
The market reacted favorably after the Federal Reserve’s June 11-12 meeting. The broader market marked record closes. At the June 12 press conference, Fed Chairman Jerome Powell emphasized the Fed’s focus on its dual mandate of achieving maximum employment and stable prices. While the labor market remains strong with continued job gains and low unemployment, inflation has decreased significantly from its peak but remains above the 2% target, currently at 2.7% and the Federal Open Market Committee (FOMC) believes it’s still high.
Key Developments
The Fed Chairman reported that GDP growth slowed from 3.4% in Q4 of 2023 to 1.3% in Q1 of 2024. However, underlying demand indicated by private domestic final purchases grew at 2.8%. Consumer spending has moderated but remains solid, and investment in equipment and intangibles has improved. Moreover, the labor market is balanced, with job gains averaging 218,000 per month in April and May, and the unemployment rate was at 4%. Inflation, as measured by PCE prices, rose 2.7% over the past year, while core PCE rose 2.8% and the CPI rose 3.3% in May, with the core CPI at 3.4%. Finally, the FOMC decided to keep the federal funds rate unchanged at 5.25% to 5.5% and to continue reducing securities holdings to manage inflation.
Powell emphasized a cautious approach to policy adjustments. The Chairman said that while some progress has been made toward the inflation target, more data is needed to ensure inflation is sustainably moving toward 2%. The Fed will continue to assess economic data and adjust policies as needed to support their dual mandate. He reiterated the commitment to restoring price stability to ensure long-term economic health. The Fed chair noted that the median projection for the federal funds rate by FOMC participants is 5.1% by the end of 2024 if the “economy evolves as expected.” Nevertheless, Jerome Powell highlighted that the projections are not a guarantee and will depend upon the data in the coming months.
The CME’s FedWatch tool reveals that 35.8% of the market expects the interest rates to remain the same in September, 59.2% expect a 25 basis points (bps) reduction, and 5% believe in a 50 bps rate cut. These numbers have risen significantly in favor of rate cuts since we reported them on May 31 in our article about the best up-and-coming stocks.
After a long wait, the Fed has finally hinted at potential rate cuts in September, which brings tons of opportunities in the market. Let’s take a look at some now.
Our Methodology
For this article, we used the app to identify over 100 stocks with a $2 billion market cap that were trading under $20, as of June 12. We narrowed down our list to the stocks with positive hedge fund sentiment, analyst ratings, and optimistic prospects and chose the 10 stocks with the highest number of institutional investors.
Why do we care about what hedge funds do? 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).
Aerial view of an oil and gas pipeline, spanning vast landscapes.
Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 43
Share Price as of June 12: $19.88
Kinder Morgan, Inc. (NYSE:KMI) is a Texas-based energy infrastructure company that runs through various segments, including Natural Gas Pipelines, Products Pipelines, Terminals, and CO2. The company has an ownership interest or runs 79,000 miles of pipelines, 139 terminals, and 702 billion cubic feet of working natural gas storage capacity. Moreover, the company’s renewable natural gas generation capacity is nearly 6.1 billion cubic feet (Bcf) per year with an additional 0.8 Bcf in development.
Kinder Morgan, Inc. (NYSE:KMI) is one of the best Robinhood stocks under $20 as it provides healthy shareholder returns and has shown notable growth in recent years. As we discussed in our article about the best natural gas and oil dividend stocks, the company has a strong cash flow position, which makes its dividend payments secure. In April 2024, the company marked 7 consecutive years of dividend growth. It has a dividend yield of 5.82%, as of June 12.
With its investment-grade balance sheet, Kinder Morgan, Inc. (NYSE:KMI) plans to keep its dividend yield at 6% and focus on share repurchases. Since 2016, the company’s adjusted EPS has grown at a CAGR of 8%, leverage decreased by 26%, and it paid out over $20 billion in dividends and share repurchases as of Q1 2024.
Similar to utilities stocks, AI data centers also bring good news for energy infrastructure company, Kinder Morgan, Inc. (NYSE:KMI). The company is well-positioned to capitalize on the growing need for reliable and affordable energy. The company’s strategic focus on natural gas, along with the challenges of integrating renewables into the grid, emphasizes the importance of its assets in meeting future energy demands.
At a stake value of $1.146 billion, 43 hedge funds held positions in the stock in the first quarter. As of Q1, FPR Partners is the largest shareholder in the company and has a position worth $152.167 million.
Overall KMI ranks 5th on our list of the best Robinhood stocks to buy. You can visit 10 Best Robinhood Stocks Under $20 to see the other Robinhood stocks that are on hedge funds’ radar. While we acknowledge the potential of KMI as an investment, 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 KMI 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.