While it seems like everybody has been focused on the move in oil, with West Texas Intermediate making a run towards $60 a barrel and Brent crude over $60, it seems as though nobody has noticed the almost 15% jump in natural gas prices this week. There are a couple of reasons why, not the least of which is some colder weather in the south. If we ended up with a colder than forecast winter, and increased demand for liquefied natural gas (LNG), some of the top natural gas plays could show some big gains.

When we noticed the big move in natural gas this week, we screened our 24/7 Wall St. research data base for energy companies that were levered to the natural gas market. We found four stocks that investors looking for energy exposure may want to consider now, and all are rated Buy at top Wall Street firms that we cover.

Cabot Oil and Gas

Given the potential for shortages, this top natural gas play also could be a very timely pick. Cabot Oil & Gas Corp. (NYSE: COG) produces mostly natural gas in the United States, with operations primarily in Appalachia and an ancillary position Eagle Ford. The company has lined up very high-quality growth assets in the Marcellus Shales and is aggressively moving to develop these fields. Production and reserves are 96% natural gas.

U.S. energy firms are scrambling to finish a slew of pipelines that will unleash rich reserves of shale gas in Pennsylvania, West Virginia and Ohio as the nation prepares to become one of the world’s top natural gas exporters. Cabot figures to be a big player in this evolution and offers solid value and current trading levels.

Shareholders receive just a 0.8% dividend. The Merrill Lynch price target for the stock is $33, and the Wall Street consensus price objective is $29.50. The stock closed trading on Wednesday at $29.17.

Devon Energy

This stock is a favorite at Jefferies. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.

The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.

A recent Jefferies research report noted this:

Devon continues to achieve well cost reductions as the company transitions to full development mode. As an example, the Anaconda project in the Delaware Basin delivered an estimated $1 million reduction per well when compared to traditional pads. These lower well costs are a result of less non-productive time spent moving rigs and getting more efficient on repetitive processes. Two-thirds of the 2018 program will be on multi-zone projects. The company also locked in its 2018 sand for the STACK and Delaware Basin at below market rates, using regionally sourced sand vs northern white
Sand.

Investors receive a 0.61% dividend. Jefferies recently raised its price target to $45 from $43. The consensus price objective is $44.47, and shares closed Wednesday at $37.10.

EQT

This company is expected to have a huge amount of its production come in as natural gas. EQT Corp, (NYSE: EQT) operates through three segments. The EQT Production segment includes its exploration for, and development and production of, natural gas, NGLs and a limited amount of crude oil, primarily in the Appalachian Basin. This segment also includes the company’s marketing activities.

The operations of EQT Gathering segment include the natural gas gathering activities, consisting solely of assets that are owned and operated by EQT Midstream Partners.

Operations of EQT Transmission segment include the company’s natural gas transmission and storage activities, consisting solely of assets that are owned and operated by EQM. The segment focuses on various transmission projects, including Mountain Valley Pipeline and Transmission Expansion.

The company recently announced it will acquire Rice Energy in a massive $6.7 billion deal that was approved by shareholders in early November.

EQT investors receive a 0.16% dividend. JPMorgan has an Overweight rating and $81 price target. The consensus target is $77.31. The stock closed Wednesday at $58.11.

Range Resources

Many on Wall Street like this defensive natural gas stock now. Range Resources Corp. (NYSE: RRC) is primarily a producer of natural gas, with operations in Appalachia, Oklahoma, Louisiana and Texas. The company specializes in developing low-risk, long-lived natural gas reserves in unconventional gas formations. Reserves at the end of 2016 were 12.1 trillion cubic feet equivalents, of which 65% was natural gas.

While the company has cautioned that if oil and gas prices stay at current levels medium growth will drop from a projected 20% to 10% to 20%, the $3 level and higher for natural gas could provide strong earnings the rest of the year and into 2018.

Merrill Lynch’s Buy rating comes with a massive $31 price target. The consensus target is $29.08, but shares closed at $18 on Wednesday, so this is another stock with solid upside potential.

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While nobody can guarantee a colder or even normal winter, the mere fact that demand is increasing sequentially is a huge positive, and with energy as a whole having a very disappointing year compared with other S&P sectors, these stocks offer good value at current trading levels, and all have excellent upside potential to the posted price targets.

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