Free Annual Reports
Natural Gas Prices Expected To Rebound
Written by Danny Guttridge
Natural gas has been pushed further and further down for the past few years, if looking at the United States Natural Gas fund (UNG) chart. According to Business Insider, Professor Mark Perry of the Carpe Diem blog noted that if adjusted for inflation, natural gas prices have reached a multi-decade low.
Reasons for the continuous price decrease include a warmer winter (heating costs were reduced), and increased supplies from easy drilling. Due to higher oil prices and environmental concerns though, more and more people are beginning to use natural gas for a multitude of purposes. With the interest in using natural gas piquing, some companies have to benefit from it.
Kapitall reported some points from Croft Leominster Inc., a value mutual fund with a "contrarian" perspective. According to Croft, since gas trades below the industry's marginal cost of production we'll see companies shutting down and going back into oil, which will slow supply and drive up the price of natural gas. And, he argues, since natural gas is already seeing increased demand, the shift in production will further stress the supply-demand issues that are good for prices in the mid-long term.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.
Business Section: Investing Ideas
The natural gas bandwagon is beginning to look inviting, and there are companies that stand to profit from a swing toward its use. Below is a list of companies that according to Morgan Stanley are heavily exposed to natural gas. Do you think these names will see an upside to the trend?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
1. Williams Companies, Inc. (NYSE:WMB): Engages in finding, producing, gathering, processing, and transporting natural gas primarily in the United States. Market cap at $20.04B, most recent closing price at $33.89.
2. Spectra Energy Corp. (NYSE:SE): Engages in the ownership and operation of a portfolio of complementary natural gas-related energy assets in the United States and Canada. Market cap at $19.9B, most recent closing price at $30.49.
3. ONEOK Inc. (NYSE:OKE): Operates as a natural gas distributor primarily in the United States. Market cap at $8.88B, most recent closing price at $84.96.
4. Sunoco, Inc. (NYSE:SUN): Through its subsidiaries, refines and markets petroleum products, and manufactures chemicals in the United states. Market cap at $4.37B, most recent closing price at $40.63.
5. Targa Resources Corp. (NYSE:TRGP): Through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. Market cap at $2.02B, most recent closing price at $47.51.
6. Crosstex Energy Inc. (Nasdaq:XTXI): Through its partnership interest in Crosstex Energy, L.P., engages in gathering, transmission, processing, and marketing natural gas and natural gas liquids (NGLs) in the United States. Market cap at $707.99M, most recent closing price at $14.87.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Disclosure: Kapitall's Danny Guttridge does not own any of the shares mentioned above. Data sourced from Finviz.
Natural gas has been pushed further and further down for the past few years, if looking at the United States Natural Gas fund (UNG) chart. According to Business Insider, Professor Mark Perry of the Carpe Diem blog noted that if adjusted for inflation, natural gas prices have reached a multi-decade low.
Reasons for the continuous price decrease include a warmer winter (heating costs were reduced), and increased supplies from easy drilling. Due to higher oil prices and environmental concerns though, more and more people are beginning to use natural gas for a multitude of purposes. With the interest in using natural gas piquing, some companies have to benefit from it.
Kapitall reported some points from Croft Leominster Inc., a value mutual fund with a "contrarian" perspective. According to Croft, since gas trades below the industry's marginal cost of production we'll see companies shutting down and going back into oil, which will slow supply and drive up the price of natural gas. And, he argues, since natural gas is already seeing increased demand, the shift in production will further stress the supply-demand issues that are good for prices in the mid-long term.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.
Business Section: Investing Ideas
The natural gas bandwagon is beginning to look inviting, and there are companies that stand to profit from a swing toward its use. Below is a list of companies that according to Morgan Stanley are heavily exposed to natural gas. Do you think these names will see an upside to the trend?
1. Williams Companies, Inc. (NYSE:WMB): Engages in finding, producing, gathering, processing, and transporting natural gas primarily in the United States. Market cap at $20.04B, most recent closing price at $33.89.
2. Spectra Energy Corp. (NYSE:SE): Engages in the ownership and operation of a portfolio of complementary natural gas-related energy assets in the United States and Canada. Market cap at $19.9B, most recent closing price at $30.49.
3. ONEOK Inc. (NYSE:OKE): Operates as a natural gas distributor primarily in the United States. Market cap at $8.88B, most recent closing price at $84.96.
4. Sunoco, Inc. (NYSE:SUN): Through its subsidiaries, refines and markets petroleum products, and manufactures chemicals in the United states. Market cap at $4.37B, most recent closing price at $40.63.
5. Targa Resources Corp. (NYSE:TRGP): Through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. Market cap at $2.02B, most recent closing price at $47.51.
6. Crosstex Energy Inc. (Nasdaq:XTXI): Through its partnership interest in Crosstex Energy, L.P., engages in gathering, transmission, processing, and marketing natural gas and natural gas liquids (NGLs) in the United States. Market cap at $707.99M, most recent closing price at $14.87.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Disclosure: Kapitall's Danny Guttridge does not own any of the shares mentioned above. Data sourced from Finviz.
Free Annual Reports
