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Tickers in this Article: GAS, ENSI, EGN
There's just no way around natural gas - it seeps into virtually every aspect of energy production. It's cleary an important resource; however, the Energy Information Agency's (EIA) underground storage report, released on October 4, showed inventories increased less than Wall Street had anticipated. Specifically, underground storage increased by 57 billion cubic feet (Bcf), below the expected 74 Bcf.

What's important to note here is that the actual reading was (in the eyes of Wall Street) significantly below where it should have been. Overall, underground storage is 7.5% above the five-year average, which certainly isn't bad by any means. However, many analysts would prefer to see current inventories even further above the five-year average. At the end of the day, all of the aforementioned information translates to eventual buying pressure in natural gas.

The Present State of Affairs
Natural gas is trading at the lower end of its 52-week range. When winter eventually arrives and temperatures turn frigid, the present low price may turn out to have actually been a great buying point for investors. A few stocks of notable mention in the sector include Nicor (NYSE:GAS), Energysouth (Nasdaq:ENSI) and Energen (NYSE:EGN).

Nicor
While Nicor is trading with a very low price to sales ratio of 0.64, some investors may be concerned with its high price-earnings-to-growth ratio (PEG) of 7.8. What this means is that while the company may be slightly undervalued in relation to sales, in terms of the future, growth is already priced in. Nonetheless, Nicor trades with a hefty 4.3% forward dividend yield, something income investors probably love. While Nicor may not be a immediate play from here, buying on its price dips could be a good strategy. (For more insight, check out Move Over P/E, Make Way For The PEG.)

Energysouth
Energysouth, on the other hand, is trading with a lower PEG ratio of 4.1, but with a higher price-to-sales of 3.3. In English, while the company isn't quite as overvalued in relation to future growth projections, in terms of sales, revenue is fully priced in. And, on a P/E basis, the company's ratio of 30 is above many of its closest competitors. While Energysouth is a good company, the stock's bullish activity in September and early October could be setting the stock up for a pullback, should the price of natural gas wane in the near-term.


Energen

Finally, Energen, another sector leader, looks great by many Wall Street accounts. There has been some insider activity; general counsel J. David Woodruff Jr. recently exercised options to purchase 7,500 shares at $9.13 each, but then sold 2,200 for $57.46 to $57.55 apiece. While the sale may seem a little worrisome at first, it's important to remember that here's a guy with tons of knowledge about the company, who held the bulk of his newly acquired stock. Certainly not a red flag by any means. Like Energysouth, Energen also had quite a run in the past few months, moving from roughly $48.50 in August to the present $59. Though Energen is a great company, investors may want to wait and see if the price of natural gas continues falling in the next month, before chasing the stock at presently elevated levels.

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