The Russian invasion of Ukraine will have far-reaching considerations. One that will affect Europe directly is that Russia supplies about 35% of the natural gas used across the European Union. With Germany freezing the Nord Stream 2 pipeline, things could get pretty dicey, especially with another month of winter left.
The Nord Stream 2 project, which effectively doubles the capacity of an already operational Nord Stream pipeline, has been completed but cannot start operations until Germany’s energy regulator gives the go-ahead, which looks very doubtful now after hostilities have begun.
As a result, natural gas prices are heading higher. Despite the constant climate change rhetoric and opposition to fossil fuels, among the cleanest burning fuels are natural gas and liquified natural gas (LNG). In fact, LNG has proven to be better than any other fossil fuel for the environment, as it generates 30% less carbon dioxide than fuel oil and 45% less than coal. While LNG still does have an environmental footprint, it contributes to far fewer carbon emissions.
Five top companies stand to benefit from this disruption, and all are outstanding investing ideas now and in the future, when the situation in Ukraine is sorted out. We screened our 24/7 Wall St. database and found five large-cap stocks are ideal for growth stock investors looking to capitalize on the solid pricing and demand environment. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Baker Hughes
This stock makes sense for investors looking for energy exposure via services. Baker Hughes Co. (NYSE: BKR | BKR Price Prediction) is an international industrial service company and one of the world’s largest oilfield services providers.
The company provides the oil and gas industry with products and services for oil drilling, formation evaluation, completion, production and reservoir consulting, and it is the second-largest oilfield services and equipment company in the world by market cap.
Baker Hughes prides itself on being a self-described energy technology company that provides solutions to energy and industrial customers worldwide. Built on a century of experience and with operations in over 120 countries, the firm’s innovative technologies and services are taking energy forward.
Shareholders receive a 2.79% dividend. BofA Securities has a Buy rating on Baker Hughes stock, and the firm’s $35 price target compares with a $32.41 consensus. Shares traded on Thursday over the $28 level.
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Cheniere Energy
This may be the top LNG play, and it has made a nice move off the October 2020 lows. Cheniere Energy Inc. (NYSEAMERICAN: LNG) is an energy company primarily engaged in LNG-related businesses. The company operates through two segments.
Cheniere’s LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. Its LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing.
Cheniere Marketing is developing a portfolio of long- and medium-term SPAs with professional staff based in the United States, the United Kingdom, Singapore, and Chile. The company conducts its business through its subsidiaries, including the development, construction, and operation of its LNG terminal business and the development and operation of its LNG and natural gas marketing business.
Raymond James has a Strong Buy rating and a $140 price target. The consensus target for Cheniere Energy stock is $127.24, and shares traded in that ballpark on Thursday.
EQT
This company is expected to have a stunning percentage of its production come in as natural gas. EQT Corp. (NYSE: EQT) operates as a natural gas production company in the United States. It also produces natural gas liquids (NGLs) and crude oil. As of December 31, 2020, it had 19.8 trillion cubic feet of proved natural gas, NGLs and crude oil reserves across approximately 1.8 million gross acres.
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.
The $31 Truist Securities price target on the Buy-rated shares is a bit lower than the $31.59 consensus target. EQT stock was changing hands on Thursday for more than $21 a share.
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Ovintiv
This off-the-radar name has some undeniable positive prospects. Ovintiv Inc. (NYSE: OVV) engages in the exploration, development, production and marketing of natural gas, oil, and NGLs in the United States and Canada.
The company’s principal assets are in the Permian in West Texas, Anadarko in west-central Oklahoma and Montney in northeast British Columbia and northwest Alberta. Its other upstream assets are in the Eagle Ford in south Texas, Bakken in North Dakota, Uinta in central Utah, Duvernay in west central Alberta, Horn River in northeast British Columbia, and Wheatland in southern Alberta. The company was formerly known as Encana.
Ovintiv stock investors receive a 1.14% dividend. Morgan Stanley’s Overweight rating is accompanied by a $49 price target. The consensus target is up at $51.50, and shares were trading close to $39 on Thursday.
Targa Resources
This top energy midstream company is actually structured as a C corporation. Targa Resources Corp (NYSE: TRGP) is a leading provider of midstream services and one of the largest independent midstream energy companies in North America. Targa owns, operates, acquires and develops a diversified portfolio of complementary midstream energy assets.
The company is primarily engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling NGLs and related products, including services to liquefied petroleum gas exporters; gathering, storing and terminaling crude oil; storing, terminaling and selling refined petroleum products.
Targa Resources has one of the premier asset positions in the Permian Basin. With solid management, a strong balance sheet and attractive exposure to some of the most attractive U.S. energy basins, it remains a top pick across Wall Street.
Investors receive a 2.25% dividend. At Raymond James, Targa Resources stock has a Strong Buy rating and a $70 target price. The consensus target is $68.90, and shares were trading for more than $61 apiece on Thursday.
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With the natural gas prices soaring, many companies can hedge forward production at levels not seen in years. Until the situation in Ukraine stabilizes, the demand for natural gas, and especially LNG, from the United States could remain dramatically elevated.
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