11 Best Gas Stocks To Buy Now

In this article, we discuss 11 best gas stocks to buy now.

Russia’s invasion of Ukraine has accelerated the shortage of natural gas, further hiking up prices for consumers and businesses alike. This resulted in the use of alternative fuels and demand destruction. It also creates longer-term unpredictably in the natural gas market, especially in emerging nations where it used to play a primary role in energy transitions. According to the International Energy Agency, the Asia Pacific region and the industrial sector are the core drivers of growth in the natural gas market, accounting for 50% and 60% of the growth to 2025, respectively. However, the Asia Pacific region will be subject to high risk from rising prices and slow economic growth.

As per IEA data, gas production in North America rose by 2.1% in 2021 although there was limited capital expenditure in the US upstream sector, driven by higher domestic and export demand. Per IEA’s estimates, North America holds a leading position in the intermediate-term in the global growth of natural gas supply, with nearly 85 bcm added between 2021 and 2025. The region represents nearly 40% of the net increase in production capacity and over half of the worldwide net production growth during 2021 and 2025. 

Some of the best gas stocks to invest in include ConocoPhillips (NYSE:COP), Devon Energy Corporation (NYSE:DVN), and Marathon Petroleum Corporation (NYSE:MPC). 

Our Methodology 

We selected the following gas stocks based on positive analyst coverage, strong business fundamentals, and solidity of dividend profiles. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. 

Best Gas Stocks To Buy Now

11. BP p.l.c. (NYSE:BP)

Number of Hedge Fund Holders: 25

BP p.l.c. (NYSE:BP) is a London-based energy company that operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. On November 1, BP p.l.c. (NYSE:BP) declared a dividend of $0.36036 per ADS, payable on December 16 to shareholders of record on November 11. BP p.l.c. (NYSE:BP)’s dividend yield on November 28 came in at 4.09%. 

Citi analyst Alastair Syme upgraded BP p.l.c. (NYSE:BP) on November 22 to Buy from Neutral with a 540 GBp price target. The analyst said the market rotation into energy stocks still has room to run. Energy equities usually outperform in an earnings recession, which is Citi’s primary scenario for 2023. He believes BP p.l.c. (NYSE:BP) has the potential to perform well due to its fundamental growth and favorable valuation.

According to Insider Monkey’s Q3 data, 25 hedge funds were bullish on BP p.l.c. (NYSE:BP), compared to 27 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the largest position in the company, comprising 27 million shares worth $772.5 million. 

Like ConocoPhillips, Devon Energy Corporation, and Marathon Petroleum Corporation, BP p.l.c. (NYSE:BP) is one of the best energy stocks to monitor. 

10. Hess Corporation (NYSE:HES)

Number of Hedge Fund Holders: 33

Hess Corporation (NYSE:HES) is a New York-based exploration and production company that explores, develops, produces, and transports crude oil, natural gas liquids, and natural gas. It is one of the best energy stocks to monitor. On October 26, Hess Corporation reported a Q3 non-GAAP EPS of $1.89, in-line with market estimates. The revenue of $3.16 billion increased 74.6% year-over-year, topping analysts’ estimates by $250 million. 

Citi analyst Scott Gruber on November 22 raised the price target on Hess Corporation to $155 from $130 and kept a Neutral rating on the shares following the Q3 results.

According to Insider Monkey’s third quarter database, 33 hedge funds were bullish on Hess Corporation, compared to 35 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 4.6 million shares worth $500.80 million. 

9. Phillips 66 (NYSE:PSX)

Number of Hedge Fund Holders: 34

Phillips 66 (NYSE:PSX) is an energy manufacturing and logistics company that operates through four segments – Midstream, Chemicals, Refining, and Marketing and Specialties. Phillips 66 (NYSE:PSX) is one of the top energy stocks to monitor. On November 9, the company announced that it plans to return an additional $10 billion-$12 billion to shareholders by the end of 2024 through a combination of dividends and share repurchases. 

On November 9, investment advisory Piper Sandler raised the firm’s price target on Phillips 66 (NYSE:PSX) to $155 from $116 and kept an Overweight rating on the shares. Analyst Ryan Todd issued the ratings update. 

According to Insider Monkey’s data, 34 hedge funds were bullish on Phillips 66 (NYSE:PSX) at the end of September 2022, compared to 38 funds in the last quarter. D E Shaw is the largest stakeholder of the company, with 3.10 million shares worth $250.3 million. 

8. Shell plc (NYSE:SHEL)

Number of Hedge Fund Holders: 39

Shell plc (NYSE:SHEL) is a London-based energy and petrochemical company operating in Europe, Asia, Oceania, Africa, the United States, and the rest of the Americas. The company runs through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. Shell plc (NYSE:SHEL) is one of the premier energy stocks to consider. 

On October 27, Shell plc (NYSE:SHEL) declared a $0.50 per ADS quarterly dividend, in line with previous. The dividend is distributable on December 19, to shareholders of record on November 11. The company also announced $4 billion in share buybacks, which is expected to be concluded by Q4 2022. Shell plc (NYSE:SHEL) intends to raise the per share dividend by 15% for the fourth quarter, which will be paid in March 2023. Total 2022 shareholder distributions came in at $26 billion.

Piper Sandler analyst Ryan Todd on November 11 raised the price target on Shell plc (NYSE:SHEL) to $71 from $65 and maintained an Overweight rating on the shares. The Q3 results were incrementally bullish for the integrated oil 2023 macro outlook, the analyst wrote in a research note.

Among the hedge funds tracked by Insider Monkey, Shell plc (NYSE:SHEL) was part of 39 public stock portfolios at the end of Q3 2022, and William B. Gray’s Orbis Investment Management held a prominent stake in the company, consisting of 11.2 million shares worth $558.5 million. 

Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:

“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”

7. Suncor Energy Inc. (NYSE:SU)

Number of Hedge Fund Holders: 45

Suncor Energy Inc. (NYSE:SU) is a Canadian integrated energy company focused on exploring, producing, and marketing crude oil, natural gas, byproducts, refined products, and power. On November 16, Suncor Energy Inc. declared a C$0.52 per share quarterly dividend, a 10.6% increase from its prior dividend of C$0.47. The dividend is payable on December 23, to shareholders of record on December 2. Suncor Energy Inc.’s dividend yield on November 28 stood at 4.41%. 

On November 21, investment advisory Credit Suisse maintained an Outperform rating on Suncor Energy Inc. but lowered the firm’s price target on the shares to C$60 from C$63. Analyst William Janela issued the ratings update. 

According to Insider Monkey’s Q3 data, Suncor Energy Inc. was part of 45 hedge fund portfolios, compared to 47 in the earlier quarter. Paul Singer’s Elliott Management is a significant stakeholder of the company, with 10 million shares worth $281.6 million. 

Here is what ClearBridge Investments International Growth ADR Strategy has to say about Suncor Energy Inc. in its Q1 2022 investor letter: 

“Also within the structural bucket, we added to our commodity exposure with the purchase of Suncor Energy. Suncor, a past holding, is a Canadian integrated oil company where we capitalized on attractive valuation due to a COVID-19-induced slowdown. We expect recovery in oil demand and strong pricing will result in faster than expected free cash flow growth and financial deleveraging.

The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out.”

6. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Holders: 47

Valero Energy Corporation (NYSE:VLO) is a Texas-based company that manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments – Refining, Renewable Diesel, and Ethanol. It produces conventional, premium, and reformulated gasoline, diesel fuels, jet fuels, other refined petroleum products, and natural gas liquids. Valero Energy Corporation is one of the top energy stocks to consider. 

On October 26, Valero Energy Corporation declared a quarterly dividend of $0.98 per share, in line with previous. The dividend is payable on December 9, to shareholders of the company as of November 17. Valero Energy Corporation’s dividend yield on November 28 came in at 2.83%. 

Piper Sandler analyst Ryan Todd on November 9 raised the price target on Valero Energy Corporation to $177 from $147 and kept an Overweight rating on the shares. The analyst increased his 2023 outlook for refining margins to within 10% of 2022 levels.

According to Insider Monkey’s Q3 data, 47 hedge funds were long Valero Energy Corporation, compared to 43 funds in the earlier quarter. Israel Englander’s Millennium Management is a prominent stakeholder of the company, with 1.8 million shares worth $194.2 million. 

In addition to ConocoPhillips, Devon Energy Corporation, and Marathon Petroleum Corporation, Valero Energy Corporation is one of the top gas stocks backed by smart investors. 

5. Pioneer Natural Resources Company (NYSE:PXD)

Number of Hedge Fund Holders: 49

Pioneer Natural Resources Company (NYSE:PXD) is an independent oil and gas exploration and production company in the United States, with operations in the Midland Basin in West Texas. The company explores for, develops, and produces oil, natural gas liquids, and gas. Pioneer Natural Resources Company declared on October 27 a $5.71 per share quarterly dividend. The dividend is distributable on December 15, to shareholders of record on November 30. The dividend yield on November 28 came in at 10.25%. 

On November 17, Piper Sandler analyst Mark Lear raised the price target on Pioneer Natural Resources Company to $347 from $346 and maintained an Overweight rating on the shares. The analyst updated his exploration and production models and fiscal 2023 outlook following the Q3 results.

Among the hedge funds tracked by Insider Monkey, 49 funds reported owning stakes worth $851.4 million in Pioneer Natural Resources Company at the end of Q3 2022, compared to 56 funds in the last quarter worth $696 million. Andrew Weiss’ Weiss Asset Management is the leading position holder in the company, with 1.2 million shares worth $273.5 million. 

Here is what Carillon Scout Mid Cap Fund has to say about Pioneer Natural Resources Company in its Q1 2022 investor letter:

“Pioneer Natural Resources performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.”

4. Marathon Petroleum Corporation (NYSE:MPC)

Number of Hedge Fund Holders: 50

Marathon Petroleum Corporation operates as an integrated downstream energy company primarily in the United States. In addition to providing reformulated gasolines and blend-grade gasolines, the company gathers, processes, and transports natural gas and natural gas liquids. It is one of the premier energy stocks to invest in. 

On November 1, Marathon Petroleum Corporation declared a $0.75 per share quarterly dividend, a 29.3% increase from its prior dividend of $0.58. The dividend is payable on December 12, to shareholders of record on November 16. 

Wells Fargo analyst Roger Read on November 3 raised the price target on Marathon Petroleum Corporation to $131 from $116 and reiterated an Overweight rating on the shares. While Q4 results may be weaker due to greater planned turnaround activity, the analyst still sees significant upside potential. 

According to Insider Monkey’s data, 50 hedge funds were long Marathon Petroleum Corporation at the end of the third quarter of 2022, and Paul Singer’s Elliott Management held the biggest stake in the company, comprising 11 million shares worth over $1 billion. 

Here is what Clark Street Value has to say about Marathon Petroleum Corporation in its Q4 2021 investor letter:

“During the worst of covid, I bought some LEAPs on Marathon Petroleum (MPC) as a proxy for Par Pacific (PARR) since long dated options weren’t available on the later.  Those MPC calls expire next month and I’ll take profits, with PARR I’ve reduced my position throughout the year and might sell the rest early next year, I’ve owned it for 6-7 years and it has gone nowhere, they haven’t touched the NOLs, just a difficult business that I probably don’t understand as well as I should.”

3. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 51

Devon Energy Corporation is an Oklahoma-based independent energy company, primarily engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. On November 1, Devon Energy Corporation posted a Q3 non-GAAP EPS of $2.18 and a revenue of $5.43 billion, outperforming Wall Street estimates by $0.05 and $640 million, respectively. Due to recent acquisitions, Devon Energy Corporation revised its production forecast higher in the fourth quarter to a range of 640,000 to 660,000 Boe per day, a 6% increase compared to the prior-year quarter.

On November 22, Citi analyst Scott Gruber maintained a Buy rating on Devon Energy Corporation but trimmed the firm’s price target on the shares to $78 from $80 following the Q3 results.

According to Insider Monkey’s data, 51 hedge funds were bullish on Devon Energy Corporation at the end of September 2022, compared to 57 funds in the prior quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 10.6 million shares worth about $642 million. 

GoodHaven Capital Management released its second-quarter 2022 investor letter and mentioned Devon Energy Corporation. Here is what it said:

“Our biggest dollar gainer within this period was Devon Energy Corporation, a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”

2. EOG Resources, Inc. (NYSE:EOG)

Number of Hedge Fund Holders: 52

EOG Resources, Inc. (NYSE:EOG) is a Texas-based company that explores for, develops, produces, and markets crude oil, natural gas, and natural gas liquids. Its primary producing areas are in New Mexico, Texas, and the Republic of Trinidad and Tobago. On November 3, EOG Resources, Inc. declared a $0.825 per share quarterly dividend, a 10% increase from its prior dividend of $0.750. The dividend is distributable on January 31, 2023 to shareholders of record on January 17. Also, the company declared a special dividend of $1.50 per share, which is payable on December 30. 

On November 22, Citi analyst Scott Gruber raised the price target on EOG Resources, Inc. to $160 from $150 and maintained a Buy rating on the shares following the Q3 results.

According to Insider Monkey’s data, 52 hedge funds were bullish on EOG Resources, Inc. at the end of Q3 2022, compared to 43 funds in the last quarter. Harris Associates held the leading stake in the company, with more than 7 million shares worth $787.4 million. 

Here is what Oakmark Select Fund has to say about EOG Resources, Inc. in its Q1 2022 investor letter:

“EOG Resources (+36%), was among our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”

1. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 64

ConocoPhillips is a Texas-based company that explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. It is one of the best energy stocks to invest in. On November 3, ConocoPhillips declared a $0.51 per share quarterly dividend, a 10.9% increase from its prior dividend of $0.46. The dividend is payable on December 1, to shareholders of record on November 15. The company also announced a $20 billion increase in share buybacks, taking the existing share repurchase program to $45 billion. This is consistent with ConocoPhillips’s plan for future share repurchases.

On November 22, Citi analyst Alastair Syme raised the price target on ConocoPhillips to $160 from $132 and kept a Buy rating on the shares. The market rotation into energy equities has “further to run, even though names in our US coverage already sit at all-time highs,” the analyst told investors. History indicates that energy stocks usually perform well in an earnings recession, wrote the analyst.

According to Insider Monkey’s data, 64 hedge funds were bullish on ConocoPhillips at the end of September 2022, compared to 71 in the prior quarter. Ric Dillon’s Diamond Hill Capital held a prominent stake in the company, with 6.3 million shares worth $646.6 million.  

ClearBridge Investments made the following comment about ConocoPhillips in its Q3 2022 investor letter:

“ConocoPhillips handily outperformed the energy sector, which led the value benchmark. Its exposure to natural gas helped the stock perform more in line with natural gas E&Ps, which led the sector due to the European energy crisis and U.S. shale gas being considered a secure long-term source of liquid natural gas. In addition to COP’s low-cost resource base, conservative balance sheet and experienced management team, we appreciate its strong focus on ESG measures, which we believe is a good indicator of the quality of a company’s business model and management team.

Specifically, we appreciate solid governance practices with compensation metrics emphasizing ROCE and relative total shareholder return, the board’s effective oversight of management as well as the company’s methane flaring leadership. COP is investing in field electrification and carbon capture across its portfolio, with ambitions to deliver oil production with a CO2 intensity of sub-5 kg/BOE, which would be one of the lowest emission sources of supply in the world.”

You can also take a look at 14 Best Casino Stocks To Buy for 2023 and 10 Best Roth IRA Stocks To Buy. 

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This article is originally published at Insider Monkey.