After reaching as high as $3.80 per million British thermal units (MMBtu) in the beginning of 2017, natural gas prices witnessed a downtrend throughout the year. After recovering to around $3.20 in early 2018, the commodity has returned to current levels of roughly $2.63. However, the U.S. Energy Information Administration (EIA) expects natural gas to recover in 2018 on an uptick in U.S. consumption and export growth, forecasting an average price of $3.20 over the course of 2018.

This bodes well for companies that develop and sell natural gas. 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 nearly 6% in 2018. We have chosen four of the best companies that deal with natural gas. None of them are pure natural gas plays, but all of these companies derive significant income from natural gas. In addition, each of these companies has a chart pattern that is promising for 2018. (To learn more, check out: A Natural Gas Primer.)

Investors in this sector should monitor natural gas prices in case inventories rise like they did in 2016. All figures are current as of Feb. 9, 2018.

BHP Billiton Limited (BHP)

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

In 2016, the stock rose from around $18 per share, and it is now trading at over $45 per share. The chart looked healthy going into 2017, but then it started moving down gradually. The shares broke sharply upward in June and July 2017, and after moving sideways for several months, BHP stock took off again in December to end the year with a solid run. The stock declined with the rest of the market into February 2018, but if natural gas prices rise, BHP will be a profitable natural gas play. This stock also offers investors stability because of its diversified product line. (See also: 3 Stocks Poised to Gain on a 10% Plunge in Dollar.)

Antero Resources Corporation (AR)

Independent oil and natural gas company Antero explores resources in the United States, with operations focused in the Appalachian Basin. It has 292 miles of gas pipelines. The company has been enhancing efficiency while generating strong production growth, which could pay off if natural gas prices recover as expected.

The stock has been trending downward since June 2016, but it ticked upward at the end of 2017. After the recent sell-off, the stock is currently trading at $17.17 per share. As of this writing, the 50-day moving average is below the 200-day moving average, indicating that there may be some additional downside for the stock. Investors would be wise to wait for the 50-day moving average to cross above the 200-day before jumping in. 

  • Average Volume: 3,406,314
  • Market Cap: $5.416 billion
  • P/E Ratio (TTM): N/A
  • EPS (TTM): -$1.13
  • Dividend and Yield: N/A (N/A)

Cabot Oil & Gas Corporation (COG)

Cabot is a shale exploration company. Although it produces natural gas, it also buys natural gas for resale. The Houston-based company utilizes its gathering systems and pipelines to sell natural gas to a variety of customers, including power generators and local energy distributors.

After reaching a high in May 2017, the stock gave up some gains. It moved up in June, and after a few months of relatively flat performance, the shares saw another sharp increase in the final days of August, and the price shot up yet again in October. After the declines in February 2018, the stock pays a 1.03% dividend. Cabot's revenues and operating income have dropped according to the two latest quarterly reports, but this stalwart that dates back to 1989 has the track record, management and resources to do well this year. (See also: Cabot Misses Earnings and Revenue Estimates in Q3.)

  • Average Volume: 4,802,353
  • Market Cap: $10.892 billion
  • P/E Ratio (TTM):N/A
  • EPS (TTM): -$0.32
  • Dividend and Yield: $0.24 (1.03%)

Phillips 66 Common Stock (PSX)

Phillips 66 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-based company was started in 1875, making it the oldest natural gas company on our list.

The stock began moving sharply upward in June 2017, climbing to a high of around $107 in January 2018 before returning to current levels under $93 during the recent market correction. Up volume has been strong, and the 50-day moving average crossed above the 200-day moving average in August 2017. Both of these indicators suggest that there is more upside coming for the stock. (For more, see: Phillips 66 Q3 Earnings Beat Estimates, Increase Y/Y.) 

  • Average Volume: 1,881,604
  • Market Cap: $46.729 billion
  • P/E Ratio (TTM): 9.43
  • EPS (TTM): $9.85
  • Dividend and Yield: $2.80 (2.93%)

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 sources other than natural gas. This offers protection against natural gas price fluctuations. (For additional reading, check out: Natural Gas Industry: An Investment Guide.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.