Natural gas has long been a staple resource used in heating, cooking, and electricity production. More recently, it has begun to figure more prominently in industrial applications and even as a fuel source for automobiles. The U.S. Department of Energy estimates that about 23 million vehicles worldwide are powered by natural gas. It is difficult to find pure play natural gas companies, 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 spiked in price after the Russian invasion of Ukraine because Russia is a major gas producer and has since been subject to major sanctions. Many of these companies are enjoying sharp rebounds in revenue growth this year in the wake of massive disruptions 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)—have provided a one-year trailing total return of 74.0%. This is well above the Russell 1000’s one-year trailing total return of -13.1%. These figures and all data below are as of Sept. 15, 2022.
Here are the top three natural gas stocks with the best value, the fastest growth, and the most momentum. As mentioned, many of these companies are not pure play natural gas names, but they 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 lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Natural Gas Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing 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|
- DCP Midstream L.P.: DCP Midstream is a midstream energy company that transports, trades, markets, and stores natural gas liquids (NGLs) and related products. The company also gathers, compresses, treats, and processes natural gas. In early August, DCP Midstream announced financial results for Q2 of its 2022 fiscal year (FY), the three-month period ending June 30, 2022. Th company reported $383 million in net income attributable to partners compared to a loss the year earlier as total operating revenue more than doubled. Net cash from operating activities soared 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 announced in early August financial results for Q2 FY 2022, the three-month period ended June 30, 2022. The company reported net income of $1.2 billion compared to a net loss of $600 million in the prior year quarter as operating revenue jumped more than four-fold.
- CNX Resources Corp.: CNX Resources focuses primarily on natural gas and explores, acquires, and develops properties within the Appalachian Basin. On July 26, CNX Resources and Dynamis Power Solutions announced the first electric power drilling system in the Appalachian Basin. The drill will run completely on natural gas that is produced on-site.
These are the natural gas stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means, as well as find growing companies that have not yet reached profitability. In addition, earnings per share (EPS) can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Because the natural gas sector has turned around fairly recently after net losses in several recent quarters, we are focusing on companies’ revenue growth in the table below.
|Fastest Growing Natural Gas Stocks|
|Price ($)||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|
|Chesapeake Energy Corp. (CHK)||103.59||12.5||406.4|
- Coterra Energy Inc.: Coterra Energy Inc is a diversified energy company that develops oil and gas properties. The company explores for and produces oil, natural gas, and NGLs.
- 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.
- Chesapeake Energy Corp.: Chesapeake Energy is an oil, gas, and NGLs production company that explores and develops onshore properties. On Aug. 2, the company released its financial results for Q2 2022. Net income available to shareholders is $1.2 billion as total operating revenues rose more than five-fold, compared to a loss of $400 million in the prior year quarter.
These are the natural gas stocks that had the highest total return over the last 12 months. Companies with total returns over 2,500% were excluded as outliers.
|Natural Gas Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Vermillion Energy Inc. (VET)||24.88||4.1||217.2|
|Antero Resources Corp. (AR)||39.76||12.2||124.1|
|Comstock Resources Inc. (CRK)||19.97||4.7||118.5|
|First Trust Natural Gas ETF (FCG)||N/A||N/A||74.0|
- Vermilion Energy Inc.: Vermilion Energy is a Canada-based energy producer that explores, develops, acquires, and produces crude oil and natural gas properties. As of Aug. 11, Vermillion Energy announced a 33% increase in quarterly cash dividend payments to CA$0.08 ($0.06), payable on Oct. 17 for shareholders of record as of Sept. 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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