Hess Midstream offers 8.5% yield and 15% upside despite recent challenges, backed by strong contracts and cash flow.

Hess Midstream remains a strong buy with an 8.5% yield and at least 15% upside potential despite recent underperformance and drilling challenges in the Bakken region. The company benefits from a long-term contract with Chevron through 2033, which includes annual fee increases linked to inflation, ensuring stable cash flow and reducing risks from oil price and volume fluctuations. Hess Midstream's free cash flow yield is around 13%, supported by lower capital expenditures, increasing third-party revenues, and high EBITDA margins of 83%. The balance sheet is strengthening, with leverage expected to drop below 3x by year-end, and further share buybacks are anticipated, positioning the company well for potential future acquisitions.