5 Most Undervalued Natural Gas Stocks To Buy According To Hedge Funds

The energy sector is a category of companies that play a role in extracting, refining, or supplying consumable fuels, such as coal, oil, and gas. Antero Resources Corp. is an oil and natural gas company that explores and develops natural gas, NGLs, and oil properties. Southwestern Energy Co. is an independent energy company that explores and produces natural gas, oil, and related products. It’s a clean energy source that’s in high demand due to growing concerns about climate change. These orders would suggest a continued EBITDA margin increase at an attractive day rate.

• Given the unique characteristics of natural gas, demand is on track to continue growing in the coming years.
• DCP Midstream LP is a midstream energy company that transports, trades, markets, and stores natural gas liquids and related products.
• As long as demand for natural gas demand remains high, investors get the best of both worlds with WES stock.
• The current geopolitical situation with the Russian invasion of Ukraine has impacted crude oil prices.
• Tellurian Inc.’s primary asset is its Driftwood LNG project, located in southwest Louisiana.

The stock closed at $2.72 per share on Oct. 18, making it inherently risky due to its low price. But analysts seem to like it, giving it a consensus recommendation of 2.5 on a scale of 1 — “strong buy” — to 5 — “sell”. Tellurian Inc. is an upstream natural gas company with almost 100 drillable locations and, it estimates, 1 trillion cubic feet of net natural gas resource. DCP Midstream has an annual dividend yield of 4.46%, making it a good choice for those looking for income.

Kinder Morgan controls the country’s largest natural gas transmission network. With natural gas traveling through pipelines, the infrastructure in this sector is crucial. The company’s pipelines transport natural gas, crude oil, gas, and carbon dioxide. The terminals store renewable fuels, chemicals, and various other products.

The stock has nearly reached the consensus price target of analysts. Natural gas stocks can be volitile, but investing in them can be a great way to diversify your portfolio. Natural gas contains a range of different chemical compounds but is primarily composed of methane. Methane is a colorless, odorless and tasteless gas that can be burned to create electrical power. Using natural gas as an energy source dates back to the early 1800s, when gas was used to illuminate street lamps. The once swampy earth and its decomposed plants and animals produced layers and layers of carbon-based materials.

Pioneer Natural Resources Company (NYSE:PXD)

In addition,earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. Because the natural gas sector has turned around fairly recently after net losses in several recent quarters, we are focusing on companies’ revenue growth in the table below. Alternatively, maybe you’ll take a softer line on yield because you’d like the income to be reliable.

The company is a leader in fuel cell technology, which converts chemical energy into electricity through a clean and efficient process. Analysts commonly compare ROIC to a company’s weighted average cost of capital. ROIC should be the higher of the two numbers—that means the company is creating value. Those parameters will likely include some or all the metrics defined below. As you dive into stock research, though, you’ll see that no company outperforms in all areas.

And on Sept. 22, U.S. regulators gave the company permission to introduce feed gas, which keeps Cheniere on track for commercial service in the first half of 2022. Additionally, EQT’s financial picture is troublesome in other ways. On a trailing 12-month basis, the company has negative profit margins. Benzinga is compensated if you access certain of the products or services offered by eToro USA LLC and/or eToro USA Securities Inc. With the S&P 500 down nearly 20% and the NASDAQ falling by one-third, big winners were few and far…

Should you buy natural gas stocks?

Natural gas prices have soared in 2022, reaching prices not seen since 2008, amid conflict between Russia and Ukraine. Russia is one of the world’s largest producers of natural gas, accounting for around 17% of total global production in 2020. These are the natural gas stocks that had the highest total return over the last 12 months.

As the U.S. scales up its LNG exports, companies like Cheniere Energy should see higher revenues in the coming years. Ultimately, I think this is a situation where you were looking for rallies that you can fade. Markets are very quiet, and that suggests that perhaps there is a bit of a lack of interest, or perhaps even a potential accumulation phase. Nonetheless, there’s no real desire by most traders to get involved, but it still remains a “fade the rally” type of situation.

The company is concentrated in the development and production of natural gas, crude oil, and natural gas liquids. The company recently announced the completion of its new holding company structure. On February 21, 2021 the company was identified as one of the World’s Most Admired Companies by Fortune. In the fourth quarter of 2020, APA announced a net income of $10 million. Comstock Resources Inc. is an oil and natural gas producer focused on North Louisiana and East Texas in the Haynesville natural gas basin.

Higher natural gas prices would mean more revenues and profits for natural gas companies. While tech and growth names have underperformed, the energy and materials sector has outperformed. Crude oil and natural gas companies are among the top gainers in the S&P 500 and even legendary investors like Warren Buffett have been attracted to energy stocks. And if, as some analysts believe will happen, natural gas prices continue to rise as temperatures fall, it stands to reason it will be a tide that lifts all stocks in the sector. Investors may be feeling the same way, as short interest in COG stock has come down in the last 30 days. If you do decide to add natural gas stocks to your portfolio, make sure that they don’t make up the majority of your investments.

That’s no small order, since the stock market has been unpredictable and cash accounts are paying 4% or more. If you have cash available to invest, high-yield dividend stocks can be a nice source become a full stack web developer of passive income. That income, along with some spending cutbacks, could get your budget to balance in short order. TotalEnergies expects to continue expanding its LNG empire in the coming years.

Tellurian’s stock price has been volatile in recent years, but the company remains one of the best penny stocks in the natural gas sector. The company’s market esp8285 vs esp8266 capitalization currently stands at around $1.3 billion. Shell capitalized on strong conditions in the LNG market to post robust trading profits in 2022.

Earthstone Energy Inc. is an independent oil and gas company focused on acquiring and developing reserves located in the Delaware Basin, Midland Basin, and other areas. Earthstone said that net income climbed roughly 15-fold on surging revenues in its latest quarter, driven by record production and the acquisition of assets in New Mexico. The company provides high-quality services to the oil and gas industry with a focus on safety and operational excellence.

As well, the company’s Altman Z-Score of 3.7 reflects relatively low bankruptcy risk. In this article, we shared the 11 best natural gas stocks to buy now. You can skip our analysis of the natural gas industry and its growth catalysts and go to 5 Best Natural Gas To Buy Now. Antero Resources Corp., Comstock Resources Inc., and Chesapeake Energy Corp. are among the top-performing natural gas stocks after they surged on a quadrupling in natural gas prices.

Is natural gas a good investment?

The company focuses on developing natural gas and natural gas liquids in Pennsylvania, Ohio, West Virginia and Louisiana. Kinder Morgan’s energy transition ventures business unit aims to identify, analyze, and pursue commercial opportunities as the energy sector transitions to lower-carbon fuel sources. Kinder Morgan’s leading natural gas infrastructure business generates very stable cash flow. Overall, 94% comes from take-or-pay contracts, other fee-based arrangements, or hedges, which allowed it to generate $3.4 billion in free cash flow in 2022. In other words, short-term volatility is likely to plague even the best natural gas stocks.

They, however, slowed after the coronavirus-induced decline in the economic activity. However, as economic activity rebounds in China and Asia – which account for more than half of the gas demand – U.S. natural gas companies are bound to thrive. Overall, Transocean is a company that is worth considering for your portfolio, especially if you are looking for natural gas penny stocks.

These would pile on top of one another and mix with silt, sand and carbon calcite to create an immense amount of pressure. This pressure caused some of the organic material to change the carbon and hydrogen into natural gas. Other pockets of organic material became coal, petroleum and other fossil fuels. Noble Corp. is one of the world’s largest offshore drilling contractors. Although it’s trading closer to its 52-week high than its 52-week low, analysts give it a “strong buy” rating.

Not long after a time when many oil companies were either cutting or suspending dividends, that’s a remarkable accomplishment. This is one reason why Chevron is part of the exclusive Dividend Aristocrat club. This illustrates the risks and rewards of investing in a company so closely tied to a commodity like natural gas.

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The debt reduction could leave the company with ample cash for other shareholder-friendly activities such as dividends, share repurchases, and accretive acquisitions. The company also reinstated https://forexhero.info/ its dividend in late 2021, which it intends to increase. According to our database, the number of AR’s long hedge funds positions decreased at the end of the fourth quarter of 2020.

How Can I Identify Stocks That Are Going To Rally?

Instead, use them to complement a larger portfolio of total market index funds, S&P 500 funds and large-cap stocks. 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. Natural gas corporations continue to be profitable ventures for investors while also powering the country. Kinder Morgan allocates its cash flow toward paying a high-yielding dividend, repurchasing shares, and expanding its natural gas network through capital projects and acquisitions. The company entered 2022 with $1.4 billion of expansion projects in its backlog, about 45% of which were natural gas-related infrastructure.

While the demand of natural gas is expected to remain soft in the short term, the opportunity for long-term investors is huge in the industry. According to a report by EIA, total consumption of natural gas in 2021 is expected to be about 81.7 billion cubic feet per day (Bcf/d) , a decline of over 1% from 2020. The agency also estimates that industrial consumption in the year will average 23.0 Bcf/d in 2021, up 0.4 Bcf/d from last year, thanks to the recovery in the economic activity. 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.

While the hydrocarbon space carries a reputation for generous passive income opportunities, BSM stands out. Its forward yield of 11.1% is well above the energy sector’s average yield of 4.2%. However, sustainability questions will cloud this dividend, as the payout ratio of 86% is on the high side. For starters, Europe’s price caps still need a “qualified majority” of 15 countries representing at least 65% of Europe’s population to agree to them before they can be implemented. Furthermore, the measure, which is meant to soften the consequences of Russia’s invasion of Ukraine, may backfire. With gas traders fearing losses, they could end their activities, resulting in supply shortages and causing prices to jump — exactly what the caps were meant to prevent.

Gray Nelson

Gray Nelson is probably best known for his writing skill, he writes stories as well as news . He was born in US . Gray Nelson passion is reading and writing articles.