Energy

Hot Summer Weather Running Natural Gas Higher: 4 Stocks to Buy Now

Lee Jackson

Published: July 22, 2016 10:20 am

Last Updated: January 13, 2020 5:25 am

After years of trading in a tight boxed range, natural gas has taken off, and with the U.S. a top supplier, hot summers and cold winters can add up to big gains for some of the top stocks in the energy sector. The U.S. Energy Information Administration (EIA) reported that U.S. natural gas stocks increased by 34 billion cubic feet for the week ending July 15. Analysts were expecting a storage addition in a range of 32 billion to 44 billion cubic feet.

With the weather expected to stay hot, especially in Texas and across the Southwest, demand for electricity is big, and many top utilities are using clean-burning natural gas. We screened our own 24/7 Wall St. database for energy stock levered to natural gas and found four that make sense to look at.

Anadarko Petroleum

This top stock is still down a stunning 52% since the highs printed in 2014. Anadarko Petroleum Corp. (NYSE: APC) operates through three segments. The Oil and Gas Exploration and Production segment explores for and produces natural gas, oil, condensate and natural gas liquids (NGLs).

The Midstream segment provides gathering, processing, treating and transportation services to Anadarko and third-party oil, natural gas and NGLs producers, as well as owns and operates gathering, processing, treating and transportation systems in the United States. The Marketing segment markets oil, natural gas and NGLs in the United States; oil and NGLs internationally; and anticipated liquefied natural gas production from Mozambique.

The company’s asset portfolio includes U.S. onshore resource plays in the Rocky Mountains, the southern United States, the Appalachian basin and Alaska; the deepwater Gulf of Mexico; and in Mozambique, Algeria, Ghana, Brazil, Colombia, Côte d’Ivoire, Kenya, Liberia, New Zealand and other countries. As of December 31, 2014, it had approximately 2.9 billion barrels of oil equivalent of proved reserves.

Anadarko investors receive a miniscule 0.38% dividend. The Wall Street consensus price objective is $66.03. Shares closed most recently at $54.17.

CONSOL Energy

The company almost has been more than in half from highs printed in 2014. CONSOL Energy Inc. (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.

The company deploys an organic growth strategy focused on rapidly developing its resource base. Its premium coal assets are sold to electricity generators and steelmakers, both domestically and internationally. CONSOL also provides energy services, including coal terminal services, water services and land resource management services.

Top analysts have cited company management when noting that operations in the Marcellus continue to become more efficient as CONSOL drills longer laterals, more stages and uses more proppant.

CONSOL investors are paid a 0.9% dividend. The Wall Street consensus price target is $17.62. Shares closed Thursday at $16.96.
EQT

This company is expected to have a stunning 99% of its production come in as natural gas. EQT Corp.’s (NYSE: EQT) superior cost structure and above-average growth may help it exploit stable and rising natural gas prices. With an increasing reserve structure and a projected higher number of Marcellus wells to be drilled in the coming five years, the company exhibits industry-leading organic growth momentum.

With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology. This technology is designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint. That is very shareholder friendly. Plus, the company is a low-cost producer with a very strategic midstream presence.

The company’s midstream holdings are considered among the best in the industry, and with a $1.75 billion stake in Equity Midstream Partner, the company has a combined $10 billion in midstream holdings.

EQT investors are paid a small 0.16% dividend. The consensus price target is posted at $84.37. The stock closed Thursday at $74.82.

Range Resources

Many on Wall Street like this defensive natural gas stock now. Range Resources Corp. (NYSE: RRC) operates as an independent natural gas, NGLs and oil company. It engages in the exploration, development, and acquisition of natural gas and oil properties.

The company holds interests in developed and undeveloped natural gas and oil leases in the Appalachian region of the United States. It owns and operates 4,462 net producing wells and approximately 905,000 net acres under lease in the Appalachian region, and 444 net producing wells and approximately 308,000 net acres under lease in the Texas Panhandle, as well as in the Anadarko Basin of western Oklahoma, the Nemaha Uplift of Northern Oklahoma and Kansas and the Permian Basin of West Texas and Mississippi.

The company markets and sells natural gas to utilities, marketing and midstream companies and industrial users; NGLs to natural gas processors or users of NGLs; and oil and condensate to crude oil processors, transporters and refining and marketing companies. As of December 31, 2015, it had proved reserves of 9.9 trillion cubic feet of natural gas equivalents and will continue to pursue an organic growth strategy targeting high return, low-cost projects within its large inventory of low risk, development drilling opportunities.

The consensus price target is $48.16. The stock ended trading most recently at $40.70 per share.

Since it is possible these top natural gas stocks could back up some, it makes sense to scale in some capital now and see how earnings and guidance look.