According to some estimates, this site has 84 trillion cubic feet of recoverable natural gas. According to a report by the International Energy Agency, the Asia Pacific region will account for almost 60% of the total consumption increase through 2024. China will account for about 40% of the global gas demand growth over the next five years. The Chinese government implemented “coal-to-gas” policy to combat air pollution in the country. These transformations along with a booming industrial cycle in the country would increase gas consumption.
If you want to invest in cleaner sources of energy with more diversification built into a single investment, you may want to look into Q.ai’s Clean Tech Kit. Our artificial intelligence scours the grid trading strategies markets for the best investments for all manner of risk tolerances and economic situations. Liquefied natural gas has become a hot topic since Europe has imported a record amount of LNG in 2022.
All of these avenues have different risk-return payoffs and you have to weigh the investment option against the individual risk appetite. On the profitability side, WDS has a net margin of 31.7%, better than nearly 83% of the industry. As with the other stocks on this list, WDS has lost momentum recently. Shares are down more than 10% since hitting a 52-week high in November. Additionally, EQT’s financial picture is troublesome in other ways. On a trailing 12-month basis, the company has negative profit margins.
Another critical criterion is finding gas producers that have strong balance sheets, giving them the financial flexibility to withstand economic turbulence. These are the natural gas stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability.
Here Are 7 Stocks to Play the Rally in Natural Gas
That said, we will continue to monitor how companies in the natural gas industry perform financially. Diamondback Energy, Inc. ranks 9th on our list of 11 best natural gas stocks to buy now. The company was founded in 2007 and is engaged in the exploration of hydrocarbons and natural gas. The company recently completed its acquisition of 32,500 net acres in the Northern Midland Basin from Guidon Operating LLC.
- During the fourth quarter of 2020, the company reported cash flow from operating activities of $403 million.
- It is not an unreasonable bet, given that there are very real concerns that governments are moving too slowly on their stated transition goals.
- Companies must turn natural gas into a pressurized liquid and transport it using specialized ships that can carry it to overseas markets.
- At the end of the fourth quarter, 31 hedge funds in Insider Monkey’s database of 887 funds held stakes in Antero Resource Corporation, compared to 21 in the third quarter.
- Likewise, the steady cash flow generated by natural gas infrastructure companies such as Kinder Morgan and Cheniere Energy makes them stand out as top natural gas stocks.
Billions of dollars are being invested in facilities to match this growing worldwide demand for this energy source. The company also operates LNG export facilities and markets LNG — from its own facilities and those operated by third parties — to customers around the world. The combination enables Shell to keep costs low, so it can maximize the value of the LNG it produces.
Natural gas, too, is something that can be utilized further so that it can complete with the renewable energy sector. If not, it could have a difficult time keeping up—as will the oil sector at some point. However, natural gas may hold on longer purely because of its versatility and better public image. Exxon Mobil Corporation, doing business as ExxonMobil, is an American oil and gas corporation with a history dating back over 135 years. ExxonMobil began as a regional kerosene production company and has since scaled its operation up to include both excavating and exporting natural gas and oil. The best way to invest in renewable energy is to buy mutual funds or exchange-traded funds that build portfolios of green energy companies.
We will focus on natural gas companies that work on finding, producing, delivering, and exporting the energy source. Pioneer Natural Resources Company is one of the 11 best natural gas stocks to buy now. In January 2021, PXD completed its $4.5 billion acquisition of the independent oil and gas company Parsley Energy. During the fourth quarter of 2020, the company reported a total profit of $43 million, or $0.26 per share. Texas-based Apache Corporation ranks 7th in our list of 11 best natural gas stocks to buy now. The company is concentrated in the development and production of natural gas, crude oil, and natural gas liquids.
Best Natural Gas Dividend Stocks To Buy
By market cap, ExxonMobil is the largest non-government-owned energy company in the world. The company was created in 1999, via a merger of Exxon and Mobil, the successors of John D. Rockefeller’s Standard Oil Company. With headquarters in Irving, Texas, ExxonMobil’s core business is the exploration, production and trade of crude oil and natural gas as well as manufacturing petroleum products. 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.
We have mostly avoided shorting oil companies in the last few years. We have little confidence in the long-term viability of operations in the Bakken, and Hess remains a large player. At the end of the fourth quarter, 31 hedge funds https://bigbostrade.com/ in Insider Monkey’s database of 887 funds held stakes in Antero Resource Corporation, compared to 21 in the third quarter. FPR Partners is the biggest stakeholder in the company, with 17.7 million shares, worth $96 million.
With a goal of providing investors with a well-supported and slow-growing dividend, it seems like the deal to buy assets from Dominion is reasonable and being handled prudently. If you are looking for a reliable, high-yield dividend stock, Dominion’s share price drop on the acquisition news could be a good opportunity for you to buy while others are fearful. Adding these natural gas utilities probably won’t change that near-term expectation very much, especially since the deal won’t close until at least 2024.
That’s not uncommon for acquisitions and will help the company maintain its leverage within management’s target levels. The United States 12 Month Natural Gas Fund LP (UNL) and the United States Natural Gas Fund LP (UNG) are the only natural gas ETFs that trade in the U.S., excluding inverse and leveraged funds. In the US alone, it accounted for 32% of the energy consumption in 2021, and in the electricity sector, it accounted for 36% of the U.S. primary energy production.
How to Buy Energy Stocks
The market dislocation has many in the energy industry believing the LNG market will remain tight until at least 2026 since it will take time to build more capacity. LNG stocks could do exceptionally well in the coming years as companies benefit from a global need for this type of fuel. 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. 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 $3.3 billion in free cash flow in 2022. Natural gas may be a critical “bridge fuel” during the energy transition to lower-carbon alternatives.
On top of this, the European Union agreed to a cap on natural gas prices starting Feb. 15. Oh, and then there are fears that a global recession will hurt demand. 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. Instead, use them to complement a larger portfolio of total market index funds, S&P 500 funds and large-cap stocks. The last of the natural gas stocks on this list is Range Resources.
To help you understand this key market sector, we’ve profiled the 10 largest energy companies by market capitalization so you can decide which are right for your investment portfolio. With prices already at 7-year highs, investors are wondering if natural gas prices will continue to rise or if this is a bubble that’s about to burst. However, according to analysts, natural gas prices may reach 13-year highs this winter. The Houston-based Coterra Energy is a diversified energy company that was formed in 2021 as a result of the merger of Cabot Oil & Gas and Cimarex Energy. The company is reinvesting heavily into its business with a high rate of return, which has led to impressive growth in its earnings. DCP Midstream is a U.S.-based company specializing in gathering, processing, compressing, storing, and transporting natural gas.
Range Resources Corporation (RRC)
This is because if the company doesn’t make money, it won’t last long. Gas prices in Europe rose almost 10% to about 36 euros, equivalent to around $38.50, a megawatt-hour. The continent is heavily reliant on boatloads of LNG to fire factories, generate power and warm homes after Moscow all but turned off gas supplies. Industrial action in Australia sent natural-gas prices higher in Europe, underlining the continent’s vulnerability ahead of a second winter without an influx of Russian fuel. It buys natural gas from North America and converts it into LNG, which it either loads into customer containers or gives an option to deliver LNG to its customers’ regasification facilities.
It makes the remaining supplies available to other buyers at the going market rate. In its natural gaseous state, it can’t go on ships for export to global markets. Instead, specialized facilities supercool the gas to turn it into a liquid, which can go on gas-carrying vessels intended for international markets. LNG is attracting heavy interest because it’s an option to replace Russian gas in Europe.
For this year’s second quarter, Shell reported a 56% decline in its profit to $5 billion due entirely to the decline in crude and natural gas prices. Prices for liquefied natural gas (LNG) fell to $11.75 per million British thermal units (mmBtu) from $33 in the year-earlier quarter. However, despite the downturn, Shell also continues to perform for its shareholders. The company’s share price rose 13% this year and is near a 52-week high. This may feel like an odd time to be talking about the best natural gas stocks to buy.
Some energy stocks are a good bet during a recession, but not all energy companies do well in a downturn. Utility stocks that distribute electricity and natural gas have steady revenues and cash flow, making them great stocks to own during a recession. ExxonMobil has been aggressively spending to finance long-term energy production. While this temporarily hurt its cash flow and led to a cut to its bond rating in 2020, it’s banking on future oil prices rising for these investments to pay off.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector. First, the company has quality assets in the Rockies, Permian Basin, and Gulf of Mexico. As oil trends higher, the annual FCF visibility is likely to be in excess of $5 billion.
Natural gas is the cleanest fossil fuel, which makes it a good bridge to renewable energy since a full conversion to solar or wind energy sources isn’t readily available at the moment. With this context and industry outlook in mind, let’s start our list of the 11 best natural gas stocks to buy now. The world’s economies will need an increasing supply of cleaner fuel in the decades ahead to help combat climate change. Due to its abundance and lower carbon emissions compared to other fossil fuels when burned, natural gas appears poised to provide a significant portion of that supply. TotalEnergies expects to continue expanding its LNG empire in the coming years. It set a sales target of 50 million tons of LNG by 2025, which should help it to maintain its position as the second-largest global player.
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