BMO bullish on US gas midstream stocks on power demand

Investing.com -- BMO Capital Markets started coverage of U.S. midstream energy companies with bullish ratings, saying global electricity demand is driving fresh investment in natural gas pipelines and export terminals.

The brokerage started Williams and Kinder Morgan at Outperform, calling them the most direct beneficiaries of rising demand for gas to feed export plants.

It also rated Cheniere Energy, the largest U.S. LNG exporter, at Outperform, given its role in replacing coal and oil generation and in securing energy supplies.

Targa Resources was given the same rating, with BMO describing its strong position in the Permian Basin as attractive even as drilling slows.

“TRGP’s leading position in the Permian basin, which we think remains the lowest-cost resource for hydrocarbons in the U.S., is attractive,” analysts said.

Investors are underpricing the group, according to analysts at BMO.
Midstream stocks have traded at a discount to the broader market for years, reflecting past concerns about debt and commodity swings. But the firm said companies now have steadier contracts, stronger balance sheets, and clearer long-term demand.

“Global power demand shifts the narrative for our top picks WMB/KMI, which offer a durable source of demand-led growth investment through at least the end of the decade,” the brokerage said.

The order of preference for BMO’s picks is Williams, Kinder Morgan, Cheniere, and then Targa.

You May Also Be Interested In

• Paramount puts CNN sale on table to settle 12-state antitrust suit
• Dell, HPE gain pre-market as SMCI posts blowout revenue guidance
• Trump says press secretary Leavitt to leave job at month's end