Best Natural Gas Stocks for Q4 2022

Natural gas has long been a major resource used in the production of heat, cooking and electricity. Recently, it has started to become more prominent in industrial applications and even as a fuel source for automobiles. The US Department of Energy estimates that approximately 23 million vehicles worldwide are powered by natural gas. Pure play natural gas companies are hard to find, but many energy companies have large natural gas businesses. Major players include Chesapeake Energy Corp., Antero Resources Corp., and Range Resources Corp.

Natural gas prices skyrocketed after Russia’s invasion of Ukraine because Russia is a major gas producer and has since been subject to heavy sanctions. Many of these companies are enjoying sharp reversals in revenue growth this year due to massive disruption caused by the COVID-19 pandemic in 2020 and 2021.

Natural gas stocks, as measured by a benchmark exchange-traded fund (ETF)—the First Trust Natural Gas ETF (FCG)—delivered a one-year trailing total return of 74.0%. This is significantly higher than the Russell 1000’s one-year continuous total return of -13.1%. These figures and all the data below are as of September 15, 2022.

Here are the top three natural gas stocks with the best value, fastest growth, and most momentum. As mentioned, many of these companies are not pure natural gas names, but focus more than half of their production (or, in the case of midstream companies, throughput) on natural gas.

These are the natural gas stocks with the trailing 12 month price to sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of firm value. A business with higher sales may eventually produce more profits when it breaks even or returns to profitability. The P/S ratio shows how much you are paying for the stock for every dollar of sales generated.

Best Value Natural Gas Stocks
Price ($) Market Capitalization (Market Cap) ($B) Trailing 12-Month P/S Ratio
DCP Midstream LP (DCP) 38.11 7.9 0.6
Southwestern Energy Co. (SWN) 7.65 8.5 0.7
CNX Resources Corp. (CNX) 17.32 3.3 1.1

Source: YCharts

  • DCP Midstream LP: DCP Midstream is a midstream energy company that transports, trades, markets and stores natural gas liquids (NGLs) and related products. The company also collects, compresses, treats and processes natural gas. In early August, DCP Midstream announced financial results for Q2 of its fiscal year (FY) 2022, the three-month period ending June 30, 2022. The company reported $383 million in net income attributable to partners compared to a loss of a year earlier as. total operating income more than doubled. Net cash from operating activities increased significantly compared to last year’s second quarter results.
  • Southwestern Energy Co.: Southwestern Energy is an independent energy company. The company explores and produces natural gas, oil and related products. Southwestern Energy in early August announced financial results for Q2 FY 2022, the three-month period ending June 30, 2022. The company reported net income of $1.2 billion compared to a net loss of $600 million in the prior quarter as operating income jumped more. than four times.
  • CNX Resources Corp.: CNX Resources focuses primarily on natural gas and explores, owns and develops properties within the Appalachian Basin. On July 26, CNX Resources and Dynamis Power Solutions announced the first electric power drilling system in the Appalachian Basin. The drill will run entirely on natural gas produced on site.

These are the natural gas stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that can grow revenue organically or through other means, as well as find growing companies that have not yet reached profitability. Additionally, accounting factors can have a significant impact on earnings per share (EPS) which may not reflect the overall strength of the business. However, sales growth can also be misleading about a firm’s strength, as increasing sales for money-losing businesses can be detrimental if the company does not have a plan to achieve profitability. As the natural gas sector has recently undergone a major turnaround after several quarters of net loss, we are focusing on the revenue growth of companies in the table below.

Fastest Growing Natural Gas Stocks
Price ($) Market Cap ($B) Revenue Growth (%)
Coterra Energy Inc. (CTRA) 30.77 24.5 693.8
Earthstone Energy Inc. (ESTE) 15,29 1.7 427.0
(CHK) Chesapeake Energy Corp. 103.59 12.5 406.4

Source: YCharts

  • Coterra Energy Inc.: Coterra Energy Inc is a diversified energy company that develops oil and gas properties. The company explores and produces oil, natural gas and NGNs.
  • Earthstone Energy Inc.: Earthstone Energy is an independent oil and gas company. The company is focused on acquiring and developing reserves located in the Delaware Basin, Midland Basin, and other areas.
  • Company Information Company Name Chesapeake Energy Corp. Chesapeake Energy is an oil, gas and NGLs production company that explores and develops onshore properties. On August 2, the company released its financial results for Q2 2022. Net income available to shareholders is $1.2 billion as total operating income rose more than five times, compared to a loss of $400 million in the previous quarter.

These are the natural gas stocks with the highest total return over the past 12 months. Companies with total returns above 2,500% were excluded as outliers.

Natural Gas Stocks With the Most Momentum
Price ($) Market Cap ($B) Total Outcome 12 Month Follow-up (%)
Vermillion Energy Inc. (VET) 24.88 4.1 217.2
Antero Resources Corp. (ON) 39.76 12.2 124.1
Comstock Resources Inc. (CRK) 19.97 4.7 118.5
Russell 1000 N/A N/A -13.1
First Trust Natural Gas ETF (FCG) N/A N/A 74.0

Source: YCharts

  • Vermilion Energy Inc.: Vermilion Energy is a Canadian-based energy producer that explores, develops, acquires and produces crude oil and natural gas properties. As of August 11, Vermillion Energy announced a 33% increase in quarterly cash dividend payments to CA$0.08 ($0.06), payable on October 17 to shareholders of record as of September 30.
  • Antero Resources Corp.: Antero Resources is an oil and natural gas company that explores and develops natural gas, NGLs and oil properties.
  • Comstock Resources Inc.: Comstock Resources is an oil and natural gas producer focused on North Louisiana and East Texas in the Haynesville natural gas basin.

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