15 Best Data Center Stocks To Buy According to Jefferies, Citi and Wall Street Analysts

8. EQT Corporation (NYSE:EQT)

Average Analyst Share Price Target Upside: 44%

Average Analyst Share Price Target: $44.11

Number of Hedge Fund Investors  in Q1 2024: 41

EQT Corporation (NYSE:EQT) is a Pennsylvania based energy company that provides clean burning natural gas for energy production. It is a top Jefferies data center stock pick because of its ability to cleanly power up infrastructure. Since it is a commodities stock, EQT Corporation (NYSE:EQT)’s share performance depends on the volumes that it ships, the broader commodity pricing environment, its ability to keep costs under control, and its capital expenditure. EQT Corporation (NYSE:EQT) is currently looking to lower its value chain costs as it acquired midstream firm Equitrans in March 2024. Since EQT Corporation (NYSE:EQT) is a gas producer, and Equitrans shipped gas, by buying the firm EQT hopes to leverage economies of scale to its advantage in an environment where gas companies have struggled because of low prices. However, the acquisition also increases EQT Corporation (NYSE:EQT) debt and capital expenditure, at a time when its cash flow is struggling.

Legacy Ridge Capital mentioned EQT Corporation (NYSE:EQT) in its Q2 2024 investor letter. Here is what the firm said:

“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.”