Natural gas has long been a staple resource used in heating, cooking, and electricity production. More recently, it has begun to figure more prominently in industrial applications and even as a fuel source for automobiles. The U.S. Department of Energy estimates there are about 23 million vehicles worldwide that are powered by natural gas. While natural gas is a nonrenewable fossil fuel, it remains highly popular in the U.S. even as consumers shift to renewable fuel sources. In 2020, natural gas represented 34% of U.S. energy consumption. It is difficult to find pure play natural gas companies, but many energy companies have large natural gas businesses. They include Chesapeake Energy Corp. (CHK) and Antero Resources Corp. (AR).
The price of natural gas as measured by the S&P GSCI Natural Gas Index has increased by 38.0% in the past year. By comparison, the benchmark First Trust Natural Gas ETF (FCG) has provided a 1-year trailing total return of 82.1%. Part of the discrepancy between these two benchmarks is due to the fact that natural gas prices spiked in October and November before falling precipitously in December. Both benchmarks are well above the Russell 1000’s 1-year trailing total return of 23.6%. These figures and all data below are as of Dec. 17, 2021.
Here are the top 3 natural gas stocks with the best value, the fastest growth, and the most momentum. As mentioned, while these companies are not pure play natural gas names, they focus more than half of their production (or, in the case of midstream companies, throughput) on natural gas.
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 price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Natural Gas Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/S Ratio|
|DCP Midstream LP (DCP)||25.46||5.3||0.6|
|Southwestern Energy Co. (SWN)||4.51||4.6||0.7|
|Chesapeake Energy Corp. (CHK)||60.76||7.1||0.9|
- DCP Midstream LP: DCP Midstream is a midstream energy company that transports, trades, markets, and stores natural gas liquids and related products. The company also gathers, compresses, treats, and processes natural gas. For Q3 2021, ended Sept. 30, the company’s net income attributable to partners plunged by more than half year-over-year (YOY). The profit decline was driven by weak results in two segments: DCP’s Logistics and Marketing business and its Gathering and Processing business.
- Southwestern Energy Co.: Southwestern Energy is an independent energy company. The company explores and produces natural gas, oil, and related products with a focus on Pennsylvania, West Virginia, and Ohio.
- Chesapeake Energy Corp.: Chesapeake Energy is an independent exploration and production company engaged in acquiring, exploring, and developing properties producing oil, natural gas, and related products. The company’s operations are primarily within Louisiana, Pennsylvania, Texas, and Wyoming. On Nov. 30, Chesapeake Energy announced the appointment of Mohit Singh as executive vice president and chief financial officer, effective Dec. 6. Singh was previously a member of the executive leadership team of BPX Energy.
These are the natural gas stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, and find growing companies that have not yet reached profitability. In addition, earnings per share 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 growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.
|Fastest Growing Natural Gas Stocks|
|Price ($)||Market Cap ($B)||Revenue Growth (%)|
|Southwestern Energy Co. (SWN)||4.51||4.6||203.2|
|Comstock Resources Inc. (CRK)||8.56||2.0||187.2|
|CNX Resources Corp. (CNX)||13.92||2.9||181.7|
- Southwestern Energy Co.: See company description above.
- Comstock Resources Inc.: Comstock Resources is an independent natural gas producer. The company’s operations are primarily located in Louisiana and Texas. For Q3 2021, ended Sept. 30, Comstock reported adjusted net income available to common stockholders of $90.6 million compared with net loss in the prior-year quarter. Comstock’s natural gas sales nearly tripled YOY and production increased by 25%.
- CNX Resources Corp.: CNX Resources is an oil and natural gas company engaged in the exploration, development, production, and acquisition of natural gas properties in the Appalachian Basin. The company’s operations are primarily in Pennsylvania, Ohio, and West Virginia.
These are the natural gas stocks that had the highest total return over the last 12 months. Companies with total returns over 2,500% were excluded as outliers.
|Natural Gas Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Chesapeake Energy Corp. (CHK)||60.76||7.1||423.2|
|Antero Resources Corp. (AR)||17.11||5.4||230.9|
|Range Resources Corp. (RRC)||18.21||4.7||159.8|
|S&P GSCI Natural Gas Index||N/A||N/A||38.0|
|First Trust Natural Gas ETF (FCG)||N/A||N/A||82.1|
- Chesapeake Energy Corp.: See company description above.
- Antero Resources Corp.: Antero Resources is an oil and natural gas company that explores, develops, and acquires natural gas, natural gas liquids, and oil properties. The company primarily operates in West Virginia and Ohio. For Q3 2021, ended Sept. 30, Antero Resources reported adjusted net income rose five-fold from Q3 2020 as revenue grew by 40.4% YOY.
- Range Resources Corp.: Range Resources is an independent natural gas, natural gas liquids and oil company. The company is engaged in the exploration and production of natural gas, crude oil, and related products primarily in the Marcellus Shale in Pennsylvania.