As we know, natural gas has long been an indispensable resource for heating, cooking, and power generation. Recently, it has begun to play a larger role in industrial applications and even as an automobile fuel source. The United States Department of Energy estimates that approximately 23 million automobiles are fuelled by natural gas worldwide. Here are the top natural gas stocks with the greatest value, fastest growth, and most momentum.
What Exactly Is Natural Gas?
Natural gas is an essential fuel. We use it to generate electricity, heat our houses, and for various other domestic, commercial, and industrial purposes. It is the most abundant and cheapest fossil fuel that burns cleanly. Due to these features, natural gas is an essential bridge fuel during the transition to lower carbon alternatives. It can help bridge the gap by providing cleaner baseload electricity and offsetting the intermittent nature of wind and solar energy.
In addition, due to the unique qualities of natural gas, it is anticipated that demand will increase in the coming years. The International Energy Agency anticipates a 31% growth in natural gas demand by 2040, outpacing the anticipated 21% increase in oil demand. This makes the market significant for investors.
Top Best Natural Gas Stocks to Invest in 2022
Here are the top natural gas companies that you would like to examine. Although natural gas has a lower carbon footprint than coal, it will never be carbon neutral. Thus, before purchasing stocks, you should always examine the right time to invest.
The Greatest Value Natural Gas Stocks
The following are the natural gas stocks with the lowest trailing 12-month price-to-sales ratio (P/S). This can be used to approximate a company’s value for enterprises in the early phases of development or industries experiencing big shocks. When a company achieves or returns to profitability, increased sales may result in increased profits. The P/S ratio indicates how much you spend on every dollar of sales generated for a share of stock.
- DCP Midstream LP (DCP)
DCP Midstream is a midstream energy company that transports, trades, markets, and stores natural gas liquids (NGLs) and other products. The corporation also gathers, compresses, treats, and processes natural gas. Early in August, DCP Midstream released its financial results for the second quarter of its fiscal year 2022, which ended on June 30, 2022. As overall operational revenue more than doubled, the company recorded $383 million in net profits attributable to partners. Compared to the prior year’s second quarter, net cash from operating operations skyrocketed.
- Southwestern Energy Co. (SWN)
Southwestern Energy is a private energy provider. The corporation explores and manufactures natural gas, oil, and related goods. Early in August, Southwestern Energy released its financial results for the second quarter of the fiscal year 2022, which concluded on June 30, 2022. The company reported a net income of $1.2 billion compared to a net loss of $600 million in the same quarter of the previous fiscal year, as operating revenue increased by more than fourfold.
- CNX Resources Corp. (CNX)
CNX Resources is primarily focused on natural gas exploration, acquisition, and development in the Appalachian Basin. CNX Resources and Dynamic Power Solutions unveiled the Appalachian Basin’s first electric power drilling system on July 26. The drill will be entirely powered by natural gas produced on-site.
Fastest Growing Natural Gas Stocks
These are the most recent quarter’s natural gas equities with the strongest year-over-year revenue growth. Investors can identify companies that can generate revenue organically or by other means, as well as companies that are growing but have not yet attained profitability based on rising sales. In addition, earnings per share (EPS) can be considerably impacted by accounting variables that do not necessarily reflect the business’s overall health.
However, sales growth can also be a potentially deceptive indicator of a company’s strength. Raising sales on money-losing firms can be detrimental if there is no plan to achieve profitability. Due to the recent turnaround in the natural gas industry following several previous quarters of net losses, the table below focuses on revenue growth.
- Coterra Energy Inc. (CTRA)
Coterra Energy Inc is a diverse energy business developing oil and gas properties. The company conducts oil, natural gas, and NGLs exploration and production.
- Earthstone Energy Inc. (ESTE)
Earthstone Energy is a private oil and gas company. The company’s primary objective is to acquire and develop deposits in the Delaware Basin, Midland Basin, and other regions.
- Chesapeake Energy Corp. (CHK)
Chesapeake Energy produces oil, natural gas, and natural gas liquids that explore and develop onshore resources. The company reported its second quarter financial results on August 2. The net income available to shareholders is $1.2 billion, compared to a loss of $400 million in the prior-year quarter, as overall operating revenues increased by more than fivefold.
Natural Gas Stocks with the Most Momentum
These are the natural gas stocks with the highest return on investment over the past year. As outliers, companies with total returns over 2,500% were eliminated.
- Antero Resources Corp. (AR)
Antero Resources is an oil and natural gas company that explores and develops resources, including natural gas, natural gas liquids, and oil.
- Comstock Resources Inc. (CRK)
Comstock Resources is an oil and natural gas company centered in the Haynesville natural gas region in North Louisiana and East Texas.
- Vermilion Energy Inc. (VET)
Vermilion Energy is a Canadian energy company that explores, develops, acquires, and produces properties containing crude oil and natural gas. On August 11th, Vermillion Energy announced a 33% increase in quarterly cash dividends to CA$0.08 ($0.06), payable on October 17th to shareholders of record on September 30th.
If you are seeking the best position in the natural gas market, it may not even be a natural gas stock. The ISE-Revere Natural Gas Index is followed by the First Trust Natural Gas ETF (FCG). This fund’s investors own a small portion in 49 energy stocks, including some of those listed above.
However, if you want to invest in the natural gas market but don’t want to choose a single stock, this might be your good choice. Whether you want to invest in one, two, or three natural gas stocks or an ETF, adding natural gas positions to your portfolio may be beneficial.
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Source: Investopedia, Fool