Top Natural Gas Stocks to Watch in Q4 2023

Permian Resources, Earthstone Energy, and Gulfport Energy have demonstrated exceptional performance among natural gas stocks over the past year.

In 2023, Permian Resources, Earthstone Energy, and Gulfport Energy have emerged as standout performers in the natural gas industry, encompassing exploration, production, and distribution. The First Trust Natural Gas ETF (FCG), representing mid- and large-cap natural gas companies, recorded an 8.06% gain over the last year. Although this is a solid return, it trails the broader Russell 1000 index, which rose approximately 16.6% during the same timeframe.

The natural gas market has experienced significant volatility throughout the year. Following Russia's invasion of Ukraine and Europe's pivot from Russian to U.S. natural gas supplies, prices averaged around $6.45 per MMBtu in 2022 but declined to roughly $2.50 per MMBtu in 2023. Despite record-high demand in the U.S., abundant storage and increased production are expected to exert continued downward pressure on prices.

However, these market dynamics are largely priced in, presenting compelling opportunities for investors in natural gas stocks. Below, we highlight the top three natural gas stocks excelling in value, growth, and momentum as of October 20, 2023.

Best Value Natural Gas Stocks

These stocks have the lowest trailing 12-month price-to-earnings (P/E) ratios, indicating potentially undervalued opportunities with strong growth prospects.

Source: YCharts

• Vital Energy, Inc.: Operating independently in the Permian Basin of West Texas, Vital Energy focuses on acquiring, exploring, and developing oil and natural gas assets. In September, the company secured $1.2 billion in strategic agreements to expand its footprint, boost cash flow, enhance capital efficiency, and reduce leverage.
• Obsidian Energy Ltd.: Engaged in oil and natural gas exploration and production within Western Canada's Sedimentary Basin, Obsidian Energy unveiled a three-year growth plan projecting production to reach 50,000 barrels of oil equivalent per day by mid-2026, driven by developments in its Peace River assets.
• Southwestern Energy Co.: This U.S.-based firm explores and produces natural gas, oil, and natural gas liquids (NGLs). It achieved a 17% reduction in greenhouse gas emission intensity in 2022 compared to the previous year.

Fastest Growing Natural Gas Stocks

Ranked by a growth model combining year-over-year revenue and earnings-per-share (EPS) growth, these companies showcase robust financial momentum. Outliers with growth exceeding 1,000% were excluded for accuracy.

Source: YCharts

• Permian Resources Corp.: Specializing in crude oil and natural gas development in the Delaware Basin of West Texas, Permian Resources recently launched a secondary public offering of Class A common stock priced at $13.05 per share.
• Chord Energy Corp. (CHRD): Operating across the Williston Basin spanning the Dakotas, Montana, and Southern Canada, Chord Energy reported a 53% reduction in emissions intensity between 2019 and 2022 in its latest sustainability report.
• Hess Midstream LP: This energy company manages midstream assets including gathering, processing, storage, terminaling, and export. In Q3, Hess secured a $100 million sponsor unit repurchase agreement and anticipates $1 billion in financial flexibility through 2025.

Natural Gas Stocks with Strongest Momentum

These stocks delivered the highest total returns over the past 12 months, reflecting significant investor confidence.

Source: YCharts

• Permian Resources Corp.: Refer to the description above.
• Earthstone Energy, Inc.: Focused on oil and natural gas operations in the Midland Basin (West Texas) and Delaware Basin (New Mexico), Earthstone Energy was acquired by Permian Resources in August 2023 for $4.5 billion, which triggered a 17% surge in its stock price.
• Gulfport Energy Corp.: Engaged in acquisition, exploration, development, and production primarily in Eastern Ohio, Gulfport Energy’s stock rebounded in late September following a 63% expansion of its share buyback program.

Disclaimer: The views expressed are for informational purposes only and do not constitute investment advice. Please review our warranty and liability disclaimer for more details.

As of the article date, the author holds no positions in the mentioned securities.

For news tips, contact Investopedia at tips@investopedia.com.

Explore useful articles in Markets News as of 06-11-2023. The article titled " Top Natural Gas Stocks to Watch in Q4 2023 " offers in-depth analysis and practical advice in the Markets News field. Each article is carefully crafted by experts to provide maximum value to readers.

The " Top Natural Gas Stocks to Watch in Q4 2023 " article expands your knowledge in Markets News, keeps you informed about the latest developments, and helps you make well-informed decisions. Each article is based on unique content, ensuring originality and quality.