In this piece, we will take a look at ten best natural gas stocks to invest in according to hedge funds.
The natural gas sector has experienced significant fluctuations in recent years, driven by a variety of geopolitical, economic, and environmental factors. As the global energy transition takes shape, natural gas remains a crucial player in the energy mix, offering a relatively cleaner alternative to coal and oil. This importance is reflected in its role in power generation, industrial activities, and heating, particularly in fast-growing markets across Asia and the Middle East. In this article, we explore the ten best natural gas stocks to invest in, based on insights from hedge funds. These stocks represent companies that are well-positioned to benefit from the evolving dynamics of the natural gas industry, including shifts in global supply and demand, the rise of liquefied natural gas (LNG), and increasing investments in cleaner, low-emission gases.
According to the World Bank’s 2024 Commodity Markets Outlook, natural gas prices rebounded significantly in mid-2024 after a steep decline earlier in the year, following a mild winter. U.S. prices surged by 80% compared to their average in March, while European prices saw a 25% increase. This recovery was driven by strong demand from Asia, particularly for LNG, as well as outages and supply disruptions in Europe. Despite this rebound, natural gas prices are expected to be lower in 2024 compared to the previous two years, reflecting a cooling in demand and ample supply. However, a recovery is anticipated in 2025 as markets stabilize and the demand for cleaner energy sources grows.
Natural gas demand has been relatively stable, with some regions, such as Asia-Pacific, seeing an uptick driven by industrial activity in China and India. Meanwhile, Europe’s demand has remained subdued, 22% lower than its 2005 peak. The World Bank expects global demand to grow by about 2% annually through 2024 and 2025, primarily fueled by emerging markets in China and the Middle East. However, advanced economies are projected to see flat or declining demand due to a shift towards renewable energy and increased energy efficiency. At the same time, global supplies have remained stable, with record-high U.S. production offsetting declines in Russia and Europe. LNG exports from the U.S., Qatar, and Africa are expected to continue expanding to meet growing demand, particularly in Asia.
The International Energy Agency (IEA) also highlights similar trends in its 2024 Gas Market Report. According to the IEA, global gas demand grew by 3% in the first half of 2024, surpassing the historical average growth rate of 2%. However, this recovery remains fragile, with supply constraints and geopolitical tensions contributing to price volatility. The IEA points out that Asia accounted for 60% of the demand growth, with China and India seeing over 10% year-on-year increases in gas consumption. This surge in demand was driven largely by industrial use, supported by economic expansion in the region. On the supply side, LNG production faced challenges in the second quarter of 2024, marking its first year-on-year contraction since the COVID-19 pandemic. This decline in output was attributed to feed gas supply issues and unexpected outages, leading to upward pressure on prices in key markets.
As we look ahead, the natural gas market is poised for a period of moderate growth, driven by demand in fast-growing economies and the expansion of LNG trade. Both the World Bank and the IEA agree that while global demand is set to increase, the market remains vulnerable to a range of risks, including geopolitical developments, supply disruptions, and the transition to cleaner energy sources. In this context, companies that can navigate these challenges and capitalize on opportunities in the LNG sector, as well as in low-emission gas technologies, are likely to emerge as strong investment candidates.
In the second half of 2024, natural gas demand growth is expected to slow, with the IEA forecasting a year-on-year increase of just under 2%. The decline in LNG production in the second quarter of 2024 has led to tighter supply-demand fundamentals, pushing up prices in key markets such as Asia and Europe. The U.S., which has been a major driver of global LNG exports, is expected to see further expansion in export capacity by the end of the year. The Freeport LNG expansion, the ramp-up of Plaquemines LNG, and the start-up of Corpus Christi Stage 3 are among the key projects set to come online, boosting U.S. export capacity. These developments will play a crucial role in meeting growing demand in Asia and offsetting supply shortfalls in other regions.
Despite the challenges facing the natural gas industry, there are several reasons for optimism. The continued expansion of LNG trade, particularly between the U.S. and Asia, presents significant growth opportunities for companies involved in the production, transportation, and distribution of natural gas. Additionally, the increasing focus on low-emission gases offers new avenues for growth, as governments and corporations alike seek to reduce their carbon footprints. According to the IEA, the supply of low-emission gases is expected to more than double by 2027, driven by policy support and investment in cleaner energy technologies. This trend is expected to benefit natural gas companies that are investing in technologies to reduce emissions and improve the sustainability of their operations.
In short, while the natural gas market faces several uncertainties, it remains a critical component of the global energy landscape. Companies that are well-positioned to navigate the complexities of supply and demand, expand their LNG operations, and invest in low-emission technologies are likely to perform well in the coming years. As investors look for opportunities in this space, the ten natural gas stocks highlighted in this article offer a compelling mix of growth potential, financial stability, and strategic positioning within the broader energy transition. Whether driven by rising LNG exports or the push for cleaner energy, these stocks represent some of the best investment opportunities in the natural gas sector today.
A large natural gas pipeline running through a rural landscape with mountains in the background.
Our Methodology
For this article, we sifted through ETFs and online rankings to first compile a list of 20 natural gas stocks. Next, we selected the 10 stocks that were the most widely held by hedge funds, as of Q2 2024. The list is arranged in ascending order of the number of hedge fund holders in each firm.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Range Resources Corporation (NYSE:RRC)
Number of Hedge Fund Holders: 38
Range Resources Corporation (NYSE:RRC) is a key player in the natural gas sector, making it an excellent candidate for inclusion in our list of ten best natural gas stocks to invest in according to hedge funds. As of the second quarter of 2024, 38 hedge funds hold positions in Range Resources, a notable increase from 30 in the previous quarter, signaling growing confidence among institutional investors. The company’s strong presence in the Appalachian region and its diversified operations in natural gas, NGLs, and crude oil have cemented its position as a leader in the energy sector.
In its Q2 2024 earnings report, Range Resources Corporation (NYSE:RRC) demonstrated resilience in a challenging environment by maintaining efficient capital expenditure and generating substantial free cash flow. The company’s low breakeven costs, driven by class-leading drilling and completion processes, along with its liquids-rich portfolio, provided significant financial benefits. Liquids revenue uplifted natural gas prices during the quarter, with NGL price realizations outperforming industry benchmarks such as Henry Hub.
Range Resources Corporation (NYSE:RRC) continues to capitalize on its diverse transportation portfolio, exporting a majority of its propane to international markets, notably China. This export flexibility, combined with domestic sales optimization for other liquids like butane, allowed the company to achieve a premium of $24.35 per barrel for NGLs in Q2, $1.26 above the Mont Belvieu equivalent.
Operationally, the company turned 17 wells to sale, focusing on long laterals, some extending over 15,000 feet. This efficiency reduced well costs and boosted production, which reached 2.15 Bcf per day in Q2. Liquids accounted for 30% of production, with an expected rise to 32% in the second half of 2024.
From a financial standpoint, Range Resources Corporation (NYSE:RRC) posted a cash margin of 37% and realized $3.10 per Mcfe, $1.22 above NYMEX Henry Hub prices. The company’s disciplined approach to managing costs and capital allocation has resulted in strong cash flow, supporting debt reduction, share buybacks, and dividend payments. With a vast inventory of high-quality wells and strong financial metrics, Range Resources Corporation (NYSE:RRC) is well-positioned to deliver long-term value to shareholders while meeting growing global energy demands.
09. Noble Corporation plc (NYSE:NE)
Number of Hedge Fund Holders: 38
Noble Corporation plc (NYSE:NE) is a leading offshore drilling contractor and an essential player in the natural gas sector. The company’s robust offshore operations and contracts in regions rich in natural gas reserves, such as Brazil, the Gulf of Mexico, and West Africa, showcase its strategic positioning within the energy industry. As of Q2 2024, 38 hedge funds held stakes in Noble Corporation, slightly down from 41 in the previous quarter, reflecting its continued interest among institutional investors despite some adjustments.
Noble Corporation plc (NYSE:NE) reported strong financial performance in its Q2 2024 earnings, demonstrating its resilience and growth potential. The company’s revenue for the quarter stood at $661 million, an 8% increase from $612 million in Q1, driven by high utilization rates for its rigs. Adjusted EBITDA also saw a significant rise, reaching $271 million in Q2, compared to $183 million in Q1, marking a nearly 50% improvement. This growth was attributed to successful contract startups, including the Noble Regina Allen and Noble Discoverer rigs in South America.
Noble Corporation plc (NYSE:NE) strong free cash flow generation and commitment to returning capital to shareholders underscore its financial stability. The company increased its dividend by 25% to $0.50 per share, positioning itself as the highest dividend payer among U.S.-listed oilfield service companies. Additionally, Noble Corporation plc (NYSE:NE) backlog remains solid at $4.2 billion, indicating long-term revenue visibility, despite a slight decline from $4.4 billion in the previous quarter.
With increased demand for ultra-deepwater (UDW) rigs in key regions like Brazil, Noble is well-positioned to benefit from growing natural gas exploration and production activities. The company’s utilization rates for floaters improved to 78%, while its jackups saw utilization jump from 67% to 77%. These metrics reflect Noble Corporation plc (NYSE:NE) ability to capitalize on favorable market conditions, making it a promising investment opportunity for those looking to tap into the natural gas sector’s growth potential.
08. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 41
Kinder Morgan, Inc. (NYSE:KMI) is a leading energy infrastructure company in North America, playing a crucial role in natural gas transportation and storage, making it one of the top natural gas stocks to invest in according to hedge funds. As of Q2 2024, 41 hedge funds held shares in the company, down slightly from 43 in the previous quarter, highlighting its steady attractiveness among institutional investors.
The company operates approximately 82,000 miles of pipelines and 139 terminals, making it a significant player in the natural gas sector. Kinder Morgan, Inc. (NYSE:KMI) Q2 2024 earnings call highlights its robust business model, with a focus on the growing demand for natural gas, driven by increased LNG exports and the rising energy needs of data centers. Despite missing its earnings expectations slightly, with reported EPS at $0.25 compared to the expected $0.26, the company’s fundamentals remain strong.
During the quarter, Kinder Morgan, Inc. (NYSE:KMI) experienced growth in its natural gas segment, with adjusted EPS increasing by 4% and EBITDA rising by 3%. This performance was driven by increased transport and storage of natural gas, alongside steady growth in refined products. The company also maintains a healthy debt-to-EBITDA ratio of 4.1, indicating strong financial discipline. Additionally, Kinder Morgan continues to reward its shareholders, announcing a dividend of $0.2875 per share.
A key driver for the company’s future growth is the anticipated surge in natural gas demand, particularly in power generation for data centers and AI-driven industries. With projections of over 133 new gas plants being added in the U.S. over the coming years, Kinder Morgan, Inc. (NYSE:KMI) is well-positioned to benefit from this expansion. The company is actively involved in commercial discussions for over 5 billion cubic feet per day (Bcf/d) of opportunities related to natural gas power demand, underscoring its strategic advantage in the market.
Furthermore, Kinder Morgan, Inc. (NYSE:KMI) project backlog increased by $1.9 billion, reaching $5.2 billion in Q2 2024, driven by the South System 4 Expansion project. This initiative, which aims to increase capacity by 1.2 Bcf/d, will help meet growing demand in the Southeastern U.S., solidifying Kinder Morgan, Inc. (NYSE:KMI) leadership in the natural gas infrastructure sector.
07. Antero Resources Corporation (NYSE:AR)
Number of Hedge Fund Holders: 42
Antero Resources Corporation (NYSE:AR) stands out as a strong contender in the natural gas sector, given its extensive involvement in the exploration, production, and marketing of natural gas, natural gas liquids (NGLs), and oil. The company holds an impressive acreage of 515,000 net acres in the Appalachian Basin and operates over 600 miles of gas gathering pipelines, positioning it as a leading player in the U.S. energy industry. In Q2 2024, Antero Resources Corporation (NYSE:AR) saw 42 hedge funds holding its stock, up from 39 in the previous quarter, further highlighting its growing appeal among institutional investors.
The company’s operational efficiency continues to shine, with record-breaking performance in the second quarter of 2024. Antero Resources Corporation (NYSE:AR) drilled wells averaging over 18,000 feet laterally, a 16% improvement from the previous record. Its ability to complete wells faster, reducing spud-to-kickoff time to 4 days from 4.4 days in 2023, underscores its industry leadership in drilling efficiencies. Antero also achieved its second-highest production rate per well in company history, with one pad producing an impressive 37 million cubic feet equivalent per day per well.
Financially, Antero Resources Corporation (NYSE:AR) capital efficiency is notable. The company maintains the lowest maintenance capital per Mcf equivalent among its peers at just $0.54 per Mcfe, significantly lower than the peer average of $0.95 per Mcfe. This efficiency, coupled with strong well performance, allowed Antero to increase its 2024 annual production guidance despite deferring payout from Q3 to later in the year.
On the NGL side, Antero Resources Corporation (NYSE:AR) benefits from strong global propane demand and export premiums, particularly in the U.S. Gulf Coast, where export capacity remains tight. Antero’s strategic positioning at the Marcus Hook terminal allows it to capture significant export premiums, providing a robust tailwind for its financial performance. Additionally, the company’s exposure to rising LNG demand, with 75% of its natural gas sold to the LNG corridor, positions it well for future growth as demand for natural gas in electric power generation and LNG exports continues to rise. In conclusion, Antero Resources Corporation (NYSE:AR) efficient operations, strong financial metrics, and growing hedge fund interest make it a top natural gas stock to consider.
06. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 42
Chesapeake Energy Corporation (NASDAQ:CHK) is a prominent player in the natural gas sector, making it a key inclusion in our list of the ten best natural gas stocks to invest in according to hedge funds. The company’s focus on acquiring, exploring, and developing natural gas properties across the U.S. has established it as a leader, with notable assets in the Marcellus Shale and Haynesville/Bossier Shales. Chesapeake Energy Corporation (NASDAQ:CHK) owns interests in approximately 5,000 natural gas wells as of December 31, 2023. Despite a decrease in hedge fund holders from 52 in Q1 2024 to 42 in Q2 2024, the company remains an attractive investment due to its strong fundamentals.
In its Q2 2024 earnings report, Chesapeake Energy Corporation (NASDAQ:CHK) demonstrated significant improvements in its operational efficiency, particularly in drilling performance. The company reported a 50% enhancement in its Marcellus drilling performance since 2022, achieved through a combination of increased drilling speed and longer lateral lengths, which grew by nearly 3,000 feet in Q2. This progress has enabled Chesapeake to reduce drilling costs by 20% over the last two years, highlighting the company’s focus on cost reduction and efficiency. In the Haynesville region, Chesapeake successfully cut saltwater disposal costs by 25%, thanks to optimized routes and strategic partnerships with vendors.
The company also reduced its full-year capital and production expenses by $50 million, which reflects a robust focus on lowering breakeven costs. This cost discipline ensures that Chesapeake Energy Corporation (NASDAQ:CHK) remains competitive in the natural gas market, especially as prices recover. Moreover, Chesapeake has built a production capacity of up to 1 billion cubic feet per day (Bcf/d), providing flexibility to scale production based on market conditions. The deferral of 46 turn-in-line (TIL) wells and the creation of 29 drilled but uncompleted (DUC) wells further demonstrates its commitment to maintaining flexibility.
Chesapeake Energy Corporation (NASDAQ:CHK) pending merger with Southwestern Energy is another positive development, expected to deliver synergies and enhance its competitive position. This merger is anticipated to close in late 2024, and the company is well-positioned to capitalize on rising natural gas demand in the future.
05. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 44
Ovintiv Inc. (NYSE:OVV) explores, develops, and markets natural gas, oil, and natural gas liquids, operating in major regions such as Texas, Oklahoma, and British Columbia. Ovintiv Inc. (NYSE:OVV) strategic assets, including the Montney and Anadarko regions, contribute significantly to its production capacity. Furthermore, hedge fund interest in Ovintiv Inc. (NYSE:OVV) has risen sharply, with 44 funds holding positions in the company by the end of Q2 2024, up from 34 in the previous quarter, signaling growing confidence in its potential.
Ovintiv Inc. (NYSE:OVV) recent Q2 2024 earnings report highlights its solid financial performance and effective capital management. The company posted net earnings of $340 million and cash flow of over $1 billion, surpassing market expectations. This outperformance was largely driven by strong production in both oil and natural gas segments, with production exceeding the top end of guidance. Ovintiv Inc. (NYSE:OVV) focus on operational efficiency allowed it to produce 594,000 barrels of oil equivalent (BOE) per day, while maintaining low capital costs, reinforcing its reputation for strong capital efficiency.
In terms of financial metrics, Ovintiv Inc. (NYSE:OVV) generated $403 million in free cash flow, and returned 60% of it to shareholders through dividends and share buybacks. The company also reduced its debt by over $100 million during the quarter, reflecting its commitment to optimizing its capital structure. This capital discipline is supported by Ovintiv’s substantial premium drilling inventory, which will enable it to sustain production levels for the next several years without increasing capital expenditure.
Additionally, Ovintiv Inc. (NYSE:OVV) operational success in the Montney region, where well costs are among the lowest in its portfolio, demonstrates the company’s ability to maintain high margins, even amid fluctuating natural gas prices. As natural gas prices stabilize, Ovintiv Inc. (NYSE:OVV) remains well-positioned to generate robust returns for shareholders, making it an attractive investment for hedge funds and long-term investors alike.
04. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Holders: 45
EQT Corporation (NYSE:EQT) is a leading natural gas production company in the United States, well-positioned in the Appalachian Basin. With its recent acquisition of Equitrans Midstream, EQT Corporation (NYSE:EQT) has transformed into a vertically integrated natural gas business, controlling substantial natural gas assets. As of Q2 2024, EQT was held by 45 hedge funds, up from 41 in the previous quarter, demonstrating strong institutional interest.
EQT Corporation (NYSE:EQT) acquisition of Equitrans Midstream is a key strategic move, giving the company control over nearly 2 million acres of leasehold and production of over 6 billion cubic feet equivalent (Bcfe) per day. This acquisition significantly enhances EQT Corporation (NYSE:EQT) ability to deliver low-cost, high-volume natural gas, making it a top candidate for investors seeking exposure to the natural gas sector. With over 2,000 miles of gathering lines, 43 Bcfe of natural gas storage, and a newly commissioned 300-mile Mountain Valley Pipeline (MVP), EQT Corporation (NYSE:EQT) is well-positioned to meet growing U.S. and global demand for natural gas. The integration of these assets is expected to save the company around $150 million, and early synergy gains suggest further upside potential.
Operationally, EQT Corporation (NYSE:EQT) continues to outperform. In Q2 2024, the company set records in drilling efficiency, reducing well costs by 14% and achieving significant gains in completed footage per day, which is expected to lead to future capital efficiency improvements. The company’s focus on reducing system pressures via compression has also shown strong results, boosting well production by 50% in key projects.
Financially, EQT Corporation (NYSE:EQT) cost structure is a major strength. The company’s unlevered free cash flow breakeven price is projected at $2 per million BTU, making it highly competitive in the natural gas industry. Additionally, EQT reduced its net debt to $4.9 billion in Q2 2024, down from $5.7 billion at the end of 2023, thanks to operational efficiencies and strategic deleveraging efforts. Overall, EQT Corporation (NYSE:EQT) combination of scale, low-cost structure, and improving operational efficiency makes it one of the best natural gas stocks to invest in, offering a strong risk-adjusted return potential.
Legacy Ridge Capital Management stated the following regarding EQT Corporation (NYSE:EQT) in its Q2 2024 investor letter:
“In addition to Vistra’s performance compelling us to reorder the top of the portfolio, two other positions had news warranting brief updates: Summit Midstream Partners (SMLP) continues restructuring the business and balance sheet, and Equitrans Midstream (ETRN) is getting acquired by EQT Corporation (NYSE:EQT).
Lastly, we wrote about Equitrans Midstream (ETRN) in the 2023 mid-year letter, primarily discussing that company’s long and expensive journey completing the Mountain Valley Pipeline and the short-term opportunity we took advantage of. After all the hand wringing and stress with respect to that one project the whole business will end up right where it started, as part of EQT Corp. (EQT). In March, EQT announced they are acquiring each ETRN share for .3504 EQT shares. The transaction should close within the next several weeks.
EQT is the top natural gas producer in the United States with a dominant position in the Appalachian Basin and will become one of the lowest cost gas producers in the US, if not the lowest, after consummating this merger. Our fund is going to exchange the ETRN shares and become EQT owners. The investment checks important boxes for us: 1) a disciplined management team focused on tangible value creation; 2) an ability to generate significant FCF that gets returned to shareholders; 3) exposure to a commodity with strong secular demand trends, which gives us a call-option on higher prices. At only 5% of our assets it will start as a small position for us, but with natural gas prices volatile and back in the low-$2’s we should have ample opportunity to exploit the volatility over time and hopefully make it bigger.”
03. Coterra Energy Inc. (NYSE:CTRA)
Number of Hedge Fund Holders: 48
Coterra Energy Inc. (NYSE:CTRA) is a key player in the natural gas industry, making it a solid candidate for inclusion among the best natural gas stocks. With a diversified portfolio that includes significant assets in the Marcellus Shale, Permian Basin, and Anadarko Basin, the company is well-positioned to capitalize on both natural gas and oil markets. As of Q2 2024, 48 hedge funds held positions in the stock, up from 40 in the previous quarter, reflecting growing institutional confidence in the company’s long-term value.
Coterra Energy Inc. (NYSE:CTRA) second-quarter results highlight its financial strength and operational efficiency, even amid fluctuating natural gas prices. The company reported total production of 669 MBoepd, with 2.78 Bcf per day of natural gas production, beating its own guidance in all production streams, including oil, natural gas, and NGLs. Despite a 42% decline in realized natural gas prices between Q1 and Q2, Coterra’s revenue dropped only 12%, demonstrating its resilience in volatile markets. This underscores the strength of its diversified asset portfolio and capital efficiency, positioning the company well for sustained long-term performance.
One of the key reasons Coterra Energy Inc. (NYSE:CTRA) stands out is its disciplined approach to capital allocation. The company’s ability to pivot between its assets in the Marcellus, Permian, and Anadarko Basins allows it to optimize investments based on current market conditions. As natural gas markets face oversupply, Coterra Energy Inc. (NYSE:CTRA) has tactically curtailed production in the Marcellus region to preserve value, while still maintaining strong cash flow projections for 2024.
Financially, Coterra remains robust, with net income of $220 million and adjusted net income of $272 million for the second quarter of 2024. The company also generated $246 million in free cash flow, further enhancing its ability to reward shareholders through dividends and share buybacks. Coterra Energy Inc. (NYSE:CTRA) returned $295 million to shareholders in Q2, representing 120% of its free cash flow, including a $0.21 per share base dividend and the repurchase of 5 million shares. This commitment to shareholder returns is a clear indicator of management’s confidence in the company’s financial stability and future growth. With a healthy balance sheet, a strategic focus on capital discipline, and the ability to navigate near-term market challenges,Coterra Energy Inc. (NYSE:CTRA) is well-positioned for long-term success in the natural gas sector.
02. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 52
Devon Energy Corporation (NYSE:DVN) stands out as a top natural gas stock due to its robust presence in key U.S. shale basins, such as the Delaware, Eagle Ford, and Anadarko, which are rich in natural gas reserves. The company’s strategic focus on natural gas and natural gas liquids production makes it an attractive investment in the energy sector. As of the second quarter of 2024, 52 hedge funds hold positions in Devon Energy Corporation (NYSE:DVN), up from 44 in the previous quarter, reflecting increasing confidence in the company’s fundamentals.
Devon Energy Corporation (NYSE:DVN) Q2 2024 earnings highlight solid operational and financial performance. The company exceeded production guidance, with a record 335,000 barrels of oil per day, largely driven by its operations in the Delaware Basin. This basin continues to be a growth engine for Devon, contributing to the 9% year-over-year increase in per-share volumes. The company’s ability to manage costs effectively, along with impressive well productivity, has further strengthened its position.
Financially, Devon Energy Corporation (NYSE:DVN) posted core earnings of $885 million, or $1.41 per share, marking significant year-over-year growth. Operating cash flow reached $1.5 billion, a 9% increase from the previous year, and free cash flow came in at $587 million. This strong financial performance has allowed Devon to maintain a disciplined capital allocation strategy, returning 70% of its excess free cash flow to shareholders through dividends and stock repurchases. The company’s low net debt-to-EBITDA ratio of 0.6x underscores its solid balance sheet.
The recent acquisition of Grayson Mill assets in the Williston Basin has further bolstered Devon Energy Corporation (NYSE:DVN) portfolio, adding 300,000 net acres and significant oil and gas production capacity. This acquisition is expected to enhance earnings and free cash flow in the coming years, providing sustainable growth opportunities. With its strong operational performance, disciplined financial management, and strategic acquisitions, Devon Energy Corporation (NYSE:DVN) is well-positioned for long-term growth, making it a compelling choice for natural gas investors.
01. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 65
Cheniere Energy, Inc. (NYSE:LNG) stands out as a prominent natural gas stock due to its key role in liquefied natural gas (LNG) infrastructure and export. The company operates major LNG terminals in the U.S., including the Sabine Pass LNG terminal in Louisiana and the Corpus Christi LNG terminal in Texas. These terminals, along with its natural gas pipelines, allow Cheniere Energy, Inc. (NYSE:LNG) to serve global energy demands, especially in Europe and Asia. As of Q2 2024, Cheniere was held by 65 hedge funds, down from 69 in the previous quarter, reflecting continued strong interest from institutional investors.
In Q2 2024, Cheniere Energy, Inc. (NYSE:LNG) exceeded expectations, reporting an earnings per share (EPS) of $3.84, significantly higher than the expected $1.71. This solid performance is indicative of the company’s strong operational capabilities and its focus on maximizing LNG exports amidst global demand. Cheniere Energy, Inc. (NYSE:LNG) generated approximately $1.3 billion in consolidated adjusted EBITDA and distributable cash flow of $700 million, while posting a net income of $880 million. These financial metrics highlight the company’s robust cash flow generation, providing significant shareholder returns through dividends and stock repurchases.
The company’s forward-looking capital allocation plan includes a $4 billion increase in share repurchases and a planned increase in its annualized dividend to $2 per share. Such shareholder-friendly measures, backed by strong fundamentals, further boost investor confidence. Cheniere Energy, Inc. (NYSE:LNG) also raised its full-year guidance, projecting consolidated adjusted EBITDA in the range of $5.7 billion to $6.1 billion, and distributable cash flow between $3.1 billion and $3.5 billion.
The company is making substantial progress in expanding its LNG infrastructure. Its Corpus Christi Stage 3 project is over 62% complete, with Train 1 expected to produce LNG by the end of the year. This expansion not only increases production capacity but also ensures long-term stability and growth, positioning Cheniere Energy, Inc. (NYSE:LNG) as a global leader in LNG supply, especially during volatile energy markets. Given its financial strength, growth potential, and importance in global energy security, Cheniere Energy, Inc. (NYSE:LNG) remains a compelling natural gas stock for investors.
While we acknowledge the potential of LNG to grow, our conviction lies in the belief that some 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 LNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
