We came across a bullish thesis on Kinder Morgan, Inc. (KMI) on Stock Picker’s Journey’s Substack by Gregg Jahnke. In this article, we will summarize the bulls’ thesis on KMI. Kinder Morgan, Inc.’s share was trading at $24.81 as of Oct 22nd. KMI’s trailing and forward P/E were 21.89 and 18.38 respectively according to Yahoo Finance.
A close-up shot of a large pipeline pumping crude oil and pipe valves in a petroleum trust.
Kinder Morgan (KMI) recently reported a substantial 38% year-over-year increase in its project backlog, signaling robust growth prospects for the pipeline company. As pipeline companies like KMI grow by adding new capital projects to their rate base, this backlog increase is a clear indicator of expanding industrial and energy capacity, which has broader economic implications. KMI’s stock has performed impressively, rising from $18 to $25 this year, and while this strong performance might prompt value investors to consider taking profits, many are adopting a wait-and-see approach until the end of earnings season and the results of the upcoming election.
KMI’s results offer valuable insights into two key macroeconomic trends. First, the surge in KMI’s backlog reflects an underlying demand to boost industrial and energy infrastructure that is not yet fully captured in economic data. While consumer spending trends are easy to track, it is industrial investment that drives long-term economic growth, and KMI’s recent performance suggests that the outlook for capital spending—and consequently economic growth—may be stronger than expected. Some of this demand is likely tied to AI-driven growth, but the broader trend may also be related to the ongoing reshoring of U.S. manufacturing, as companies seek to localize supply chains.
Second, KMI’s situation highlights the critical role government regulation plays in economic growth. The company cannot proceed with its projects without approvals from agencies like the Federal Energy Regulatory Commission (FERC) or state bodies. This makes KMI a “Trump stock,” with its fortunes closely tied to the political landscape. If FERC becomes sluggish or more restrictive, it could significantly impact future GDP growth by delaying or halting these projects. Conversely, companies like Chart Industries (GTLS), positioned on the opposite side of the political spectrum, could benefit from a different political environment, emphasizing the diverse risks and opportunities tied to political outcomes.
Basically, the bullish thesis on KMI stems from the fact that its significant project backlog growth out of which some of it is linked to AI-driven advancements while a significant portion could be attributed to the “re-shoring” of U.S. manufacturing, as companies bring production back to the U.S. to strengthen supply chains. Additionally, if Trump is elected, regulatory approvals for these projects will be expected to accelerate, further boosting the company’s prospects. This combination of growth opportunities, driven by AI and manufacturing trends, along with potential political support, underpins the optimism around KMI.
However, building an investment portfolio based on election outcomes is a risky strategy. The unpredictable nature of politics makes it difficult to align investments with specific political predictions. As the election approaches, investors are bracing for a variety of potential outcomes but staying neutral might be the safest approach in an uncertain political landscape.
Kinder Morgan, Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held KMI at the end of the second quarter which was 43 in the previous quarter. While we acknowledge the risk and potential of KMI as an investment, our conviction lies in the belief that some 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 CL 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 was originally published at Insider Monkey.