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Why Kinder Morgan Stock Rallied Nearly 18% in January

Matthew DiLallo, The Motley Fool

What happened

After slumping by double digits in 2018, shares of Kinder Morgan (NYSE: KMI) rebounded sharply in January, rising 17.7% for the month, according to data provided by S&P Global Market Intelligence. Oil prices, earnings, and new expansion opportunities were among the many factors fueling the natural gas pipeline company's stock last month.

So what

After plunging 40% to end 2018, crude prices bounced back last month, rebounding 18%. Several factors drove up crude prices, including supply curtailments by OPEC members as well as by Canada's main oil-producing province to help reduce a glut of oil that had been piling up in storage. That improvement in the oil market helped boost the stocks of nearly all oil producers, including Kinder Morgan, which pumps crude out of Texas

Oil pumps and storage tanks with the sun setting in the background.

Image source: Getty Images.

Another catalyst for Kinder Morgan's stock last month was the fact that the company reported a strong finish to 2018. Despite the impact of lower oil prices and the sale of its controversial Trans Mountain Pipeline system, Kinder Morgan's full-year results came in ahead of its guidance and just shy of the per-share record it set in 2015. Meanwhile, the company reiterated that cash flow per share would continue its rebound this year and should top its prior peak.

And the company is teaming up with fellow pipeline operator Tallgrass Energy (NYSE: TGE) on a new pipeline solution to move oil out of the Rockies. The proposed joint venture would include Tallgrass Energy's Pony Express pipeline as well as two systems from Kinder Morgan, which the companies would link together to increase oil takeaway capacity from that region to Kinder Morgan's oil hub in Cushing, Oklahoma. The project would also enable Kinder Morgan to expand its Double H pipeline in the Bakken and could help Tallgrass Energy with two other key oil infrastructure projects.

Now what

Investors finally started giving Kinder Morgan the credit it deserves for its outstanding performance on both the financial and strategic front. However, even with last month's rebound, shares still trade at a bargain-basement price, which is why it remains a top stock for value investors.

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Matthew DiLallo owns shares of Kinder Morgan. The Motley Fool owns shares of and recommends Kinder Morgan. The Motley Fool has a disclosure policy.