1. Coterra Energy Inc. (NYSE:CTRA)
Average Price Target Upside: 31.26%
Number of Hedge Fund Holders: 39
Cramer called Coterra Energy Inc. (NYSE:CTRA) the “shrewdest operators in the industry” and said:
“I still very much like Coterra Energy, currently the only energy holding in my Charitable Trust… This is another exploration production play, although it’s more balanced between oil and gas. In fact, after a pair of acquisitions announced earlier this month, Coterra’s revenue mix will tip a bit more in favor of oil. Next year, we like to say it’s more oily, less gassy. It does happen to have the lowest cost natural gas of any company in our country and that’s because of the legacy of the old Cabot Oil & Gas which created Coterra when it merged with Cimarex and rebranded the combined company.
I like Coterra Energy because it’s one of the shrewdest operators in the industry. I trust them to handle whatever environment we already have, making it a great long-term holding. When reported late last month, Coterra announced that they’d signed three new liquified natural gas supply agreements to sell a total of 200 million cubic feet per day, indexed to international price points.
Now that’s huge because international price points are much, much higher than domestic ones. The actual sales won’t take place until 2027, 2028. That was a bummer to me, but… Look, they’re gonna unlock a lot of demand and I think it’s going to, it gives it a great, great glide path for the next couple years. When we spoke to Coterra’s CEO Tom Jorden a couple weeks ago, he told us that ‘there’s more of that to do’ and you know what that meant. That meant be patient, he’s gonna do some more deals but no deals that aren’t accretive.”
Coterra (NYSE:CTRA) is an independent oil and gas company involved in the exploration, development, and production of oil, natural gas, and natural gas liquids. On December 5, JPMorgan analyst Arun Jayaram raised the stock’s price target to $31 from $29 and maintained an Overweight rating on the stock. The firm anticipates that natural gas producers will benefit from “three key secular demand trends” in 2025: the expansion of liquefied natural gas export capacity, growing power demand due to electrification, and the shift from coal to gas.
JPMorgan also updated its exploration and production models through 2030, supporting its view of long-term gas prices remaining above $3.50 per MMBtu. The firm believes prices must rise to encourage additional supply growth from the Haynesville and other higher-cost gas basins. Furthermore, JPMorgan expects the oil market to transition from balanced in 2024 to a surplus in 2025 due to increased supply, prompting a shift to a “more defensive stance.”
In Q3, Coterra (NYSE:CTRA) secured three long-term natural gas sales agreements, starting in 2027-2028, boosting its strategy with exposure to international LNG markets. In November, the company also announced $3.95 billion in acquisitions from Franklin Mountain Energy and Avant Natural Resources, expanding its presence in New Mexico and the Permian Basin. These acquisitions are expected to add 60,000 to 70,000 barrels of oil equivalent per day by 2025, with the deals closing in Q1 2025.
While we acknowledge the potential of Coterra Energy Inc. (NYSE:CTRA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CTRA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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