Has Kinder Morgan Energy Partners LP (KMP) Become the Perfect Stock?

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Kinder Morgan has set ambitious goals for 2013. With goals of increasing earnings by more than 20%, Kinder Morgan will need new projects like terminal projects in Houston and Edmonton to get online quickly, and new pipelines in the Marcellus and other shale plays should take advantage of strong production levels from unconventional plays around the country. In addition, with the MLP getting more assets from general partner Kinder Morgan Inc (NYSE:KMI) in connection with the buyout of El Paso, Kinder Morgan Energy Partners should see greater cash flow that should help it meet its goal of distributing $2 billion to unitholders in 2013.

One way Kinder Morgan has tried to grow is by buying out other midstream companies, having gone on somewhat of an acquisition binge in recent years. After the massive El Paso acquisition, the MLP said late last month that it would buy Copano Energy, L.L.C. (NASDAQ:CPNO) for about $5 billion. The buyout will add another 6,900 miles to Kinder Morgan’s extensive pipeline network, as well as processing plants in Texas, Oklahoma, and Wyoming — all strategically important locations for Kinder Morgan to serve budding shale plays, especially the Eagle Ford.

Kinder Morgan also took steps to streamline its operations. By selling its one-third interest in the Express-Platte crude-oil pipeline to Spectra Energy Corp. (NYSE:SE) , the MLP got valuable cash for more productive assets.

For Kinder Morgan to improve, it needs to keep executing on its pipeline and CO2 businesses while increasing its refined products segment. If it can do so, then revenue growth is the best vehicle to get Kinder Morgan Energy Partners closer to perfection.

The article Has Kinder Morgan Energy Partners Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Kinder Morgan and Spectra Energy. The Motley Fool owns shares of Kinder Morgan.

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