HESM - LONG

18. Nov.

I’m targeting $38 for Hess Midstream (HESM) after seeing this breakout, and I think it's a solid investment right now. The stock is trading at a P/E ratio of 15.20, which is lower than the market average, meaning it could be undervalued. HESM has posted 19.36% EPS growth over the past year, and next year, analysts are expecting 28.4% growth. The company also has a strong profit margin of 13.06% and an impressive ROE of 42.34%, showing it's well-run and profitable. The 11.43% sales growth and 62.58% gross margin also point to solid performance. On top of that, HESM offers a 7.35% dividend yield, with a payout ratio of 112.66%, meaning they’re committed to returning value to shareholders. While the company has a high debt-to-equity ratio of 6.57, its free cash flow is strong, with a P/FCF of 12.00, showing it can generate cash. The stock has done well with a YTD return of 13.50%, and analysts have a target price of $40.20, indicating more upside. Plus, institutional ownership is high at 90.79%, showing investor confidence.

HESM could also benefit from pro-energy policies under Trump, like deregulation and support for U.S. energy independence. These policies could lower costs for companies like Hess Midstream and create more demand for midstream services, especially in areas like the Bakken Shale where Hess operates. With tax incentives and support for energy infrastructure, this could create a great environment for growth in the midstream sector. All in all, HESM is well-positioned to do well with a favorable policy environment and strong financials backing it up.