OKE - ONEOK: Waiting For A Better Valuation On This 5%-Yielding Stock
2024-03-06 07:30:00 ET
Summary
- ONEOK is a core holding within my portfolio.
- Record volumes and the completion of the deal for Magellan Midstream Partners buoyed the midstream operator's fourth-quarter results.
- ONEOK enjoys a BBB credit rating from S&P on a stable outlook.
- Shares could be priced at a 13% premium to fair value.
- Before I consider adding to my position, I would prefer a margin of safety with the valuation.
When I invest in businesses, the outlook for both the company and the industry are two factors that I don't take lightly. Of course, exceptional businesses in declining industries can still create wealth for shareholders. However, those are the exceptions to the rule in my view.
One industry toward which I am reasonably bullish is midstream operators, most especially natural gas-oriented midstream. The underlying basis for my optimism is simple math. As illustrated above, global energy consumption in 2019 was 628 exajoules. Of that, 140 exajoules, or 22.3% of global energy consumption, was made possible by natural gas according to Statista ....
ONEOK: Waiting For A Better Valuation On This 5%-Yielding Stock