We got here throughout a bullish thesis on ONEOK, Inc. on Pacific Northwest Edge’s Substack by David. On this article, we are going to summarize the bulls’ thesis on OKE. ONEOK, Inc.’s share was buying and selling at $69.57 as of October thirteenth. OKE’s trailing and ahead P/E have been 14.13 and 11.95 respectively in response to Yahoo Finance.
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Oneok (OKE) is a U.S.-based midstream vitality firm that operates as a vital middleman within the vitality provide chain, gathering, processing, transporting, and storing pure gasoline, pure gasoline liquids (NGLs), crude oil, and refined merchandise. Its enterprise mannequin is constructed round long-term, fixed-fee contracts, offering steady money flows and insulating the corporate from commodity value volatility. OKE’s largest section is NGLs, which processes uncooked NGL mixtures into ethane, propane, and butane for industrial prospects. Regardless of its strategic significance, this section has the bottom working margin at round 18%, constrained by home pricing and enter prices.
The refined merchandise and crude oil section, established via the Magellan Midstream acquisition, transports and shops fuels throughout key manufacturing areas just like the Permian Basin to the Gulf Coast and Nice Lakes. This section is closely regulated, pricey to duplicate, and instructions margins close to 40%, highlighting a wide-moat enterprise. Oneok has additional strengthened its community via acquisitions of EnLink and Medallion, integrating extra pure gasoline and crude gathering operations and guaranteeing constant demand to LNG export services.
The corporate’s scale, in depth pipeline community, and capital-intensive infrastructure create vital limitations to entry, offering sturdy benefits. Whereas OKE’s stability sheet contains substantial debt, its operations generate robust free money stream, an extended historical past of dividend progress, and a present dividend yield close to 6%, compensating buyers whereas they watch for potential inventory appreciation.
With regular efficiency in a risky vitality sector, ongoing infrastructure initiatives, and export-oriented progress, OKE represents a steady, cash-generative enterprise. Though the writer personally offered shares as a consequence of restricted conviction within the complicated midstream sector, OKE’s operational resilience, moat, and long-term free money stream era make it a lovely candidate for buyers searching for revenue and stability.
Beforehand we coated a bullish thesis on Kinder Morgan, Inc. (KMI) by Gregg Jahnke in October 2024, which highlighted the corporate’s undertaking backlog progress pushed by AI-related developments and U.S. manufacturing reshoring. The inventory has appreciated roughly 10.19% since our protection, reflecting robust infrastructure demand. David shares the same perspective however emphasizes Oneok’s steady midstream operations, wide-moat belongings, and dependable free money stream.
