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Oneok Stock Steadily Rises as Demand for Natural Gas Liquids Grow
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Oneok Stock Steadily Rises as Demand for Natural Gas Liquids Grow

Story Highlights

Oneok is proving to be a high-quality midstream player due to the growing demand for natural gas. The company’s fee-based structure provides some protection against natural gas price volatility.

Oneok Inc. (OKE) is a high-yield stock benefiting from soaring natural gas demand. A yield of 7% stems from the company’s lucrative core business, which entails gathering, storing, and transporting natural gas. The company owns a premier collection of natural gas liquid (NGL) systems that it uses to connect suppliers in the Permian and the Rocky Mountain regions.

Stock Analysis

The stock has come under pressure in recent weeks after an impressive start to the year that saw it rally by 25%, registering a new 52-week high of $75.07 in April. The stock is down by 21% from 52-week highs and down by 3.5% year-to-date.

Nevertheless, it appears to have hit strong support near $52 per share, where it has started bouncing back. Above the $55 a share level, Oneok looks set to continue climbing the ladder as a bounce-back play.

The solid core business represented by strong NGL demand might explain why asset management and investment firm, Xponance, raised its position in the company. Regulatory filings indicate Xponance acquired 1,097 shares in the first quarter, bringing its total holdings to 30,730 shares. On the other hand, Hartford Investment Management Company lowered its position by 6.7% in the first quarter.

Wall Street’s Take

The Street is optimistic about the stock, with a Moderate Buy consensus rating based on three Buys and seven Holds. In addition, the average Oneok price target of $72.80 implies a 28.3% upside potential from current levels.

Hedge Funds

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Oneok is currently Neutral as hedge funds decreased their cumulative holdings of the stock by 7,800 shares in the last quarter.

Key Takeaway for Investors

Oneok remains well-positioned to benefit from the growing demand for natural gas. In addition, worldwide energy shortages resulting from the Russia-Ukraine war should also continue to drive demand for natural gas.

Read the full Disclosure.

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