Natural-Gas Prices Jump as Chevron Strike Starts

Filip27 kwietnia, 2021

best natural gas stocks

Workers at two large natural-gas plants run by Chevron in Australia began industrial action Friday. The decision intensifies a dispute that has rattled global gas markets. In a recent development, Crescent Point sold North Dakota assets for $500 million. The company is focused on its core assets in Kaybob Duvernay and Alberta Montney. Since 2018, Crescent has acquired assets worth $3 billion in these regions.

And its P/E and forward P/E ratios are among the highest in the industry. Yet, Texas Pacific stands out among the best natural gas stocks to buy for its financial strength. Unfortunately, not every natural gas stock is equally as valuable. Natural gas stock prices are highly correlated with market natural gas prices, which means that they may quickly change in value depending on trade conditions. Many natural gas stock prices fell sharply after the onset of the COVID-19 pandemic as natural gas demand fell.

The company has acquired and developed several LNG projects in recent years. The investments pushed it up the global rankings for production capacity. Combined with its third-party supply agreements, it was the No. 2 global LNG player in early 2023.

RRC reported revenue of $1.2 billion for the second quarter of 2022. The company is presently focusing on improving costs and marketing strategies to increase its margins. Both sales and earnings are critical factors in the success of a company. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

  • Cheniere Energy (LNG) is the largest LNG company in the U.S. and the second-largest globally.
  • Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days.
  • Specifically, its net margin of nearly 70% ranks above almost 95% of the industry.
  • According to a 2014 report by the American Petroleum Institute, technically recoverable natural gas resources in the country are 2,431 Tcf, compared to 1,594 Tcf in 2005.
  • Profit can be returned to shareholders in the form of dividends and share buybacks.

This is essentially the result of a company’s earnings failing to meet market expectations. Study a company’s revenues over a given period, subtract the production cost, and you have earnings. By the way, this is also considered the most critical variable influencing the share price.

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It operates several major European pipelines as well, but the company sees its future growth in wind, solar and hydropower projects. As long as demand for natural gas demand remains high, investors get the best of both worlds with WES stock. In fact, Navallier’s article, which was written just a month ago, advised investors to stay away from COG stock. And in fairness, the stock is currently butting up against its 52-week high as well as its consensus price target.

With the current geopolitical issues still ongoing, it’s worth paying attention to how natural gas prices are impacted. The CEO of QatarEnergy (Saad al-Kaabi, who’s also the state minister for energy) declared that his company would be the largest trader of LNG over the next decade, taking the top spot from Shell. The various stages of production translate to many opportunities for investments in the natural gas and energy field. We’ll look at natural gas and energy stocks that you should know about right now if you’re looking for where to invest your money.

The company bought Stagecoach Gas Services, a pipeline and storage network in the Northeast, for $1.22 billion. It also bought Kinetrex Energy, an RNG producer, for $310 million. And in 2022, it acquired North American Natural Resources, an RNG facilities company, for $135 million. Assuming the Tug Hill deal is approved by the Federal Trade Commission in 2023, EQT would own 1.1 million acres in the core of the Marcellus Shale. If EQT were a country, it would be the 12th-largest gas producer in the world.

Companies that excavate, process or distribute natural gas may offer investors the opportunity to own a portion of the company by purchasing shares of stock. At the same time, you’re gaining exposure to the sector without buying in completely. Going one stock at a time and carving out a small niche in your portfolio is the best way to break into any new asset class. Natural gas corporations continue to be profitable ventures for investors while also powering the country.

Financing the deal will require issuing stock

The company has also repurchased 16.5 million shares in the year to date. From a strategic point of view, there are concerns that Enbridge is still too reliant on carbon fuels in a world increasingly moving to renewable and clean energy sources. The purchase of natural gas utilities does nothing to change that narrative. It is considered a transition fuel that will support the long-term shift toward renewable power.

The strategic positioning in the core of the southwest Appalachians, along with horizontal drilling, will benefit the company. With a wide inventory of drilling locations and many undeveloped sites, prospects look promising for the future of this stock. One secret to uncovering the best natural gas stocks is to focus on the lowest-cost producers. These companies should still be able to make money when prices decline.

best natural gas stocks

A low P/E ratio shows that you’re paying less for each dollar of profit generated. Profit can be returned to shareholders in the form of dividends and share buybacks. Despite having a rough time, natural gas prices can still increase over time as it has been a key source of fuel in reducing global carbon emissions. On top of that, if a dry or hotter-than-usual ripple cfds summer comes along and gets followed by a cold winter, the commodity can experience high price volatility. On June 26, natural gas futures to their peak in two months and have since dropped by 6.8% on June 30. Today, the burning of methane gas is primarily used to create electrical energy, which is then distributed to homes, factories and commercial spaces.

Crescent Point Energy (CPG)

RRC is an exploration and production (E&P) company that is almost exclusively focused on natural gas and natural gas liquids. This makes sense, because natural gas is the sector of the market with the best profit margins. This Pittsburgh-based natural gas producer is on track to make record profits this year as energy prices remain high. With the price of natural gas going up, EQT can capitalize on this with its upstream operations as a pure-play Appalachian explorer. EQT is already one of the largest natural gas producers in the U.S.

  • This warning of lower profits may lead the stock to drop a bit, making it a decent natural gas stock to invest in.
  • The company is focused on the exploration of hydrocarbons, specifically, shale oil and gas drilling.
  • Chesapeake Energy Corp is a US-based exploration and production company.
  • Or consider those that track major energy sector indexes, like the S&P 500 Energy.
  • The changes in the C-suite could be good for Chevron as the company emerges from a year of record profits in 2022.
  • It’s a major producer of oil and gas, a supplier of aviation fuel and owner of over 7,800 Chevron and Texaco retail gas stations.

Its historic core business has been in the production and sale of oil and natural gas as well as manufacturing chemicals. However, the company’s business model is designed to deliver steady demand in both good and bad times. So whether the stock is going up or going down, shareholders have direct ownership in the company and therefore are paid a piece of net revenue. Antero describes itself as the “most integrated NGL and natural gas business” in the United States. The company’s reserves are almost exclusively found in the Marcellus Shale formation that runs through the Appalachian Basin.

The company’s strong global position as a major LNG supplier should help increase future revenue. According to our database, the number of Pioneer Natural Resources Company’s long hedge funds positions decreased at the end of the fourth quarter of 2020. There were 40 hedge funds that hold a position in Pioneer Natural Resources Company by the end of December, versus 42 hedge funds in the third quarter.

Best natural gas stocks to buy now

It can help bridge the gap by supplying cleaner baseload power and helping to offset the intermittency issues of wind energy and solar power. In places where renewable energy is not available, there will frequently be a need for natural gas. The European Union’s desire to phase out Russian gas imports in response to the invasion of Ukraine has created dislocation in the market and medium-term tightness in supply. Once these are deployed, the company’s revenue growth will be supported. It’s also worth noting that the order intake in 2022 and the current year has been at a higher rate.

Cheniere has a collaboration agreement with Shell to supply it with carbon-neutral LNG cargoes by purchasing offset credits from Shell’s global portfolio of nature-based projects. The initiatives should enable Cheniere to play a role in the energy transition to cleaner fuel sources. The company’s contracted volumes provide it with predictable cash flow.

We chose the following natural gas dividend stocks based on positive analyst coverage, strong business fundamentals, and resilient dividend profiles. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022. Natural gas is a type of fossil fuel formed millions of years ago deep beneath the earth’s surface. Every year, the United States produces over 30 trillion cubic feet of natural gas.

The company has a reputation for being good to its stockholders, announcing it issued a record $7.2 billion of distributions in Q2 of this year (dividends and stock buybacks combined). Despite the volatility in crude oil prices, Chevron still managed to produce a record 772,000 barrels of oil equivalent per day at its Permian Basin operations in Texas during Q2. Oil and gas stocks as a group, measured by the benchmark Energy Select Sector SPDR ETF (XLE), have climbed by 10% in the past year, outperforming the broader market.

The hedge fund data was taken from Insider Monkey’s database of 943 elite hedge funds. We also added analyst ratings and growth catalysts around these stocks for further understanding of the readers. The company has contracted 85 percent of its production capacity, which means that it doesn’t benefit as much from the rise in spot natural gas prices.

The terminals store renewable fuels, chemicals, and various other products. LNG exports on the rise, Kinder Morgan will continue to reap the benefits due to its network of pipelines and storage facilities. This is because they’re less susceptible to the energy industry’s cyclical nature and pricing volatility. Most natural gas infrastructure companies generate stable cash flow by collecting fees as natural gas moves through their network, giving them a “toll booth” business model. For this article, we chose the natural gas companies according to their hedge fund sentiment as of the first quarter of 2022.

AutoZone (AZO Quick QuoteAZO – Free Report) is one of the leading specialty retailers and distributors of automotive replacement parts and accessories in the United States. AZO’s expected earnings growth rate for the current year is 11.5%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here. Frequently, we have seen a decline in the stock price despite earnings growth and a rally in price following an earnings decline.

Finally, Diamondback enjoys a return on equity of 34.5% and a return on assets of nearly 19%, thus indicating an extremely high-quality enterprise. BSM is down 20% from its 52-week high, made in early November, offering investors an attractive entry point. Chris Markoch is a freelance financial copywriter who has been covering the market for over five years.

Dividend investors may also want to buy into ExxonMobil for its high 7.54% dividend yield. It’s important to understand the risks involved with investing in the natural gas and energy sector, as ongoing global conflicts are still causing price fluctuations. There are also growing concerns of a possible global recession due to soaring inflation and rising fuel costs due to the Russian invasion of Ukraine.

The company also has interests in the smaller 8.9 mtpa Wheatstone LNG facility in Australia and the 5.2 mpta Angola LNG project.