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1 Reason to Sell KMI and 1 Stock to Buy Instead

KMI Cover Image

Over the past six months, Kinder Morgan has been a great trade. While the S&P 500 was flat, the stock price has climbed by 22.6% to $33.35 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is now the time to buy Kinder Morgan, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

Why Is Kinder Morgan Not Exciting?

We’re happy investors have made money, but we're sitting this one out for now. Here is one reason there are better opportunities than KMI and a stock we'd rather own.

Long-Term Revenue Growth Disappoints

A company’s long-term performance can give signals about its business quality. Even a bad business, especially in a cyclical industry, can shine for a year or so, but a top-tier one should exhibit resilience through cycles. Unfortunately, Kinder Morgan’s 7.7% annualized revenue growth over the last five years was tepid. This wasn’t a great result compared to the rest of the energy upstream and integrated energy sector, but there are still things to like about Kinder Morgan.

Kinder Morgan Quarterly Revenue

Final Judgment

Kinder Morgan isn’t a terrible business, but it isn’t one of our picks. With its shares beating the market recently, the stock trades at 24.3× forward P/E (or $33.35 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward a top digital advertising platform riding the creator economy.

Stocks We Like More Than Kinder Morgan

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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