Natural gas averaged $2.51 per MMBtu (one million British thermal units) in 2016, and will rise to $3.55 per MMBtu in 2017, according to the US Energy Information Administration (EIA). This bodes well for companies that develop and sell natural gas. The current price is roughly $2.86.

Many of the successful players in this sector also explore and develop oil, so finding a natural gas stock means looking for a company that deals in natural gas as a significant percentage of its other operations.

Natural gas is often considered seasonal, but the EIA predicts that commercial use of natural gas will rise by 6 percent in 2017.

We have chosen four of the best companies that deal with natural gas. None of them are pure natural gas plays, but all of them derive significant income from natural gas. In addition, each of these companies has chart patterns that are promising for the rest of 2017.

Investors in this sector should monitor natural gas prices in case inventories rise like they did last year. So far, the draw-down in natural gas inventories at the end of 2016 has been sustained going into 2017. All figures are current as of September 28, 2017.

1. BHP Billiton Ltd.

Natural gas is not the only source of income for BHP Billiton (BHP), because it is also a significant miner of metals. However, BHP also extracts and develops oil and natural gas. The company has assets in the Gulf of Mexico, but also develops products in Australia, as well as Trinidad and Tobago.

In 2016, the stock rose from around $18 per share and is now hitting $41 a share. The chart looked healthy going into 2017, then started moving down gradually. It broke upward in July and has continued rising. If natural gas prices continue to rise, BHP will be a profitable natural gas play.

The rise in natural gas prices is helping BHP Billiton, but it also offers investors stability because of its diversified product line.

  • Avg. Volume: 2,512,406
  • Market Cap: $106.1 billion
  • PE Ratio (TTM): 18.34
  • EPS (TTM): 2.21
  • Dividend & Yield: 1.72 (4.07%)

2. Antero Resources Corp.

Independent oil and natural gas company Antero (AR) explores resources in the United States. It has 292 miles of gas pipelines.

The company has been creating strong production growth, and anticipates a 25% production growth rate for 2017.

The stock has been trending downward since June 2016 and is currently about $20 per share.

As of this writing, the 50-day moving average is below the 200-day moving average, indicating there may be some downside for the stock. Investors would be wise to wait for the 50-day to cross above the 200-day before jumping in.

  • Avg. Volume: 3,046,332
  • Market Cap: $6.27 billion
  • PE Ratio (TTM): 462.56
  • EPS (TTM): 0.04
  • Dividend & Yield: N/A (N/A)

3. Cabot Oil & Gas Corp.

Cabot (COG) is a shale exploration company. Though it produces natural gas, it also buys natural gas for resale.

After reaching a high of $25.25 per share in May 2017, the stock gave up some gains but has been rising since early June. It is trading around $26.82 as of this writing. The stock pays a 0.82 percent dividend.

Cabot Oil revenues and operating income dropped slightly according to the latest quarterly report. This stalwart that dates back to 1989 has the track record, management, and resources to do well for the last quarter of 2017.

  • Avg. Volume: 5,211,546
  • Market Cap: $12.4 billion
  • PE Ratio (TTM): -70.21
  • EPS (TTM): -0.38
  • Dividend & Yield: 0.20 (0.75%)

4. Phillips 66 Common Stock

Phillips (PSX) is among the largest players in the energy sector. Natural gas is a significant part of its operation. Phillips processes and markets natural gas and natural gas liquids.

This Texas company was started in 1875, making it the oldest natural gas company on our list.

The stock has been moving sharply upward since June of 2017. Up volume has been strong and the 50-day moving average crossed above the 200-day moving average. Both of these indicators suggest there is more upside coming for the stock.

The Bottom Line

Anyone interested in the energy sector has some stellar natural gas companies to choose from. To be sure, the price of natural gas must be monitored, but each of these companies has income streams from other sources than natural gas. This offers protection against natural gas price fluctuations. (See also: Natural Gas Industry: An Investment Guide.)

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