Antero Resources Corp., Comstock Resources Inc., and Chesapeake Energy Corp. are among the top-performing natural gas stocks after they surged on a quadrupling in natural gas prices. The shares rose twice as fast as the benchmark First Trust Natural Gas ETF (FCG), which is up 38%, while the Russell 1000 Index fell 16% in the last year.
We look below at the top natural gas stocks in three categories: best value, fastest growth, and most momentum. The data are as of Dec. 7, 2022. While some of the companies aren't pure play natural gas companies, they focus a substantial amount of their production or throughput on it.
Best Value Natural Gas Stocks
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|
|Southwestern Energy Co. (SWN)||5.82||6.4||0.4|
|DCP Midstream LP (DCP)||38.58||8.0||0.5|
|Earthstone Energy Inc. (ESTE)||12.58||1.3||0.8|
- Southwestern Energy Co. is an independent energy company that explores and produces natural gas, oil, and related products.
- DCP Midstream LP is a midstream energy company that transports, trades, markets, and stores natural gas liquids (NGLs) and related products. It also gathers, compresses, treats, and processes natural gas. In mid-August, Phillips 66 (PSX) offered to acquire all common shares of DCP Midstream not owned by the target company or its subsidiaries. As of DCP's latest quarterly report in November, the company is still reviewing and evaluating the offer.
- Earthstone Energy Inc. is an independent oil and gas company focused on acquiring and developing reserves located in the Delaware Basin, Midland Basin, and other areas. Earthstone said that net income climbed roughly 15-fold on surging revenues in its latest quarter, driven by record production and the acquisition of assets in New Mexico.
Fastest Growing Natural Gas Stocks
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 increase revenue organically or through other means, as well as find 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 increasing 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)||24.95||19.7||472.7|
|Tellurian Inc. (TELL)||2.20||1.2||418.6|
|Earthstone Energy Inc. (ESTE)||12.58||1.3||381.5|
- Coterra Energy Inc. is a diversified energy company that explores for and produces oil, natural gas, and NGLs. For the third quarter, Coterra's net income surged about 18-fold to $1.2 billion while revenue grew nearly five-fold.
- Tellurian Inc. is an energy company focused on natural gas production, LNG marketing, and infrastructure assets. Its operations include a terminal facility, pipelines, and upstream natural gas assets. Tellurian reported a 25% increase in net natural gas production and 32% increase in natural gas sales in its latest quarter on a sequential basis.
- Earthstone Energy Inc.: See above for company description.
Natural Gas Stocks with the Most Momentum
These are the natural gas stocks that had the highest total return over the last 12 months.
|Natural Gas Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Antero Resources Corp. (AR)||31.11||9.3||80.7|
|Comstock Resources Inc. (CRK)||14.11||3.3||69.7|
|Chesapeake Energy Corp. (CHK)||94.11||12.6||61.7|
|First Trust Natural Gas ETF (FCG)||N/A||N/A||38.3|
- Antero Resources Corp. is an oil and natural gas company that explores and develops natural gas, NGLs, and oil properties.
- Comstock Resources Inc. is an oil and natural gas producer focused on North Louisiana and East Texas in the Haynesville natural gas basin. Comstock's next quarterly dividend of $0.125 per common share will be paid on Dec. 15 to shareholders as of Dec. 1, 2022.
- Chesapeake Energy Corp. is an oil, gas, and NGLs exploration and production company that focuses on onshore properties.
Advantages of Natural Gas Stocks
Natural gas prices have soared in 2022, reaching prices not seen since 2008, amid conflict between Russia and Ukraine. Russia is one of the world's largest producers of natural gas, accounting for around 17% of total global production in 2020. It was also the biggest exporter of natural gas in the world as of 2021. The war has also led many Western countries—including the U.K., U.S., and the EU—to impose sanctions on Russian energy imports.
There are many publicly traded companies in the natural gas industry, and their stock performance will tend to improve when the price of natural gas rises. However, if investing in natural gas stocks, it's important to remember that there are factors other than the price of natural gas that affect a company's share price. In other words, just because natural gas prices are up doesn't mean natural gas stocks will rise at the same rate, or at all.
Trends in Natural Gas Stocks
The following are some trends in the natural gas sector that could affect its stock prices.
- High prices because of Russian sanctions and retaliation: Russia in early September 2022 said its main gas supply pipelines would remain closed indefinitely, fueling fears of gas rationing in the European Union in the winter ahead. Russia said the shutdown was due to "technical reasons," but European officials accused Russia of weaponizing energy prices in retaliation for sanctions against Russia after its invasion of Ukraine. The Nordstream pipeline has typically supplied Europe with about a third of the gas imported to Europe from Russia.
- Global gas demand to remain resilient: Natural gas demand is likely to remain solid in the short term, but ongoing high prices could pressure this heightened demand. In addition, investment in renewables and batteries is likely to keep increasing, limiting the opportunity for gas demand to grow. Policymakers in Europe are expected to speed up the shift away from natural gas, as the recent EU proposal to support biomethane and hydrogen suggests.
- Added liquefied natural gas (LNG) projects: LNG projects will continue to be developed, as LNG prices are expected to be higher. This will happen along with more oil indexation, which can be used either to maintain a stable relative price between two or more goods or services or to maintain a stable real price of a good or service relative to the purchasing power of a currency unit.
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