In this article, we will discuss the 5 best natural gas stocks to buy now. If you want to read our analysis of the gas market, go directly to the 10 Best Natural Gas Stocks to Buy Now.
5. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 59
Stock Price as of July 7: $74.34
Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma City-based unconventional and onshore crude oil and natural gas E&P company.
On June 22, Chesapeake Energy Corporation (NASDAQ:CHK) increased its share buyback authorization from $1 billion to $2 billion, which will run through till December 2023. Under the currently approved share buyback plan, Chesapeake Energy Corporation (NASDAQ:CHK) has acquired stock worth $480.6 million.
On June 14, William Janela at Credit Suisse began coverage on Chesapeake Energy Corporation (NASDAQ:CHK) with an Outperform rating and a target price of $115. Following restructuring within the company, Chesapeake Energy Corporation (NASDAQ:CHK) has emerged as a leaner entity with a lower cost structure and a strong balance sheet. According to the analyst, Chesapeake Energy Corporation (NASDAQ:CHK) has made two substantial acquisitions to pivot its operations towards natural gas. This will aid the company in delivering above-average cash returns to the stockholders.
Overall, 59 hedge funds reported owning a stake in Chesapeake Energy Corporation (NASDAQ:CHK) at the end of Q1 2022.
4. Antero Resources Corporation (NYSE:AR)
Number of Hedge Fund Holders: 53
Stock Price as of July 7: $28.83
Antero Resources Corporation (NYSE:AR) is a Denver, Colorado-based crude oil and natural gas development, exploration, and production company.
In a research note published on July 5, Neal Dingmann at Truist upgraded Antero Resources Corporation (NYSE:AR) stock from a Hold to a Buy rating and increased the target price from $42 to $50. The analyst sees the recent sell-off in Antero Resources Corporation (NYSE:AR) stock as an overreaction by the market, providing an attractive entry-point for potential investors. The analyst sees strength in the crude oil, natural gas, and NGL markets. Mr. Dingmann also added that he considers Antero Resources Corporation (NYSE:AR) as one of the best stocks to play the possible domestic and international recovery in natural gas markets.
Of the 912 hedge funds in Insider Monkey’s database, 53 elite funds held a stake in Antero Resources Corporation (NYSE:AR) as of Q1 2022.
3. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 24
Stock Price as of July 7: $41.28
Enbridge Inc. (NYSE:ENB) is a Calgary, Alberta-based pipeline company.
Enbridge Inc. (NYSE:ENB) stock offers an attractive dividend yield of 6.5%, a strong growth outlook, and a healthy balance sheet. Enbridge Inc. (NYSE:ENB) has increased its dividend at a compound annual growth rate (CAGR) of 10% in the last 27 years. The company has the distinction of holding the biggest crude oil pipeline network in North America and the second biggest natural gas transmission pipeline in the US. Enbridge Inc. (NYSE:ENB) considers itself well protected against the impact of inflation. 80% of its revenue is one way or the other connected to mechanisms that are indexed with inflation. Furthermore, Enbridge Inc. (NYSE:ENB) would not bear the impact of inflation on capital expenditure as the majority of the capital outlay for the year is already locked via contracts.
Here’s what ClearBridge Investments said about Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
Enbridge Inc. (NYSE:ENB) was held by 24 hedge funds at the end of Q1 2022.
2. The Williams Companies, Inc. (NYSE:WMB)
Number of Hedge Fund Holders: 38
Stock Price as of July 7: $29.72
The Williams Companies, Inc. (NYSE:WMB) is a Tulsa, Oklahoma-based natural gas processing and transportation company with exposure to electricity generation as well.
In a note issued to investors on May 4, Gabriel Moreen at Mizuho increased the target price on The Williams Companies, Inc. (NYSE:WMB) from $35 to $39 and reiterated a Buy rating on the stock. Following the Q1 2022 results, The Williams Companies, Inc. (NYSE:WMB) raised its guidance by 4% at the midpoint to incorporate the impact of acquiring Trace Midstream into its financials. Moreover, The Williams Companies, Inc. (NYSE:WMB) is taking into account the positive impact of a better-than-expected outlook of commodity prices on the upstream segment of the business and a strong forecast from the company’s core holdings in Northeast and Gulf of Mexico.
The Williams Companies, Inc. (NYSE:WMB) was mentioned in the Q1 2022 investor letter of Longleaf Partners Fund. Here’s what the firm said:
“Williams – Williams similarly benefitted from the positive natural gas tailwinds in the quarter. We scaled back our position on the back of strong performance but remain confident in the business. Its infrastructure positions Williams to be an important part of the renewable energy transition in the US through joint projects with the likes of Orsted in wind and other alternative energy solutions.”
The Williams Companies, Inc. (NYSE:WMB) was held by 38 hedge funds as of Q1 2022.
1. Range Resources Corporation (NYSE:RRC)
Number of Hedge Fund Holders: 36
Stock Price as of July 7: $24.03
Range Resources Corporation (NYSE:RRC) is a Fort Worth, Texas-based natural gas E&P company with a leading position in the Marcellus shale.
On June 7, the stock price of Range Resources Corporation (NYSE:RRC) reached a five-year high as natural gas prices also rocketed on the spot market. The company is focused on reducing its debt and also enhancing shareholder return. Range Resources Corporation (NYSE:RRC) stock is currently priced near 15% FCF yields. The company has hedged 50% of its production for 2023. This means that in case natural gas prices plummet due to inflationary pressures, the top line and bottom line of Range Resources Corporation (NYSE:RRC) would not be heavily impacted.
Here’s what Aristotle Capital Management said about Range Resources Corporation (NYSE:RRC) in its Q1 2022 investor letter:
“Range Resources (NYSE:RRC), a natural gas focused exploration and production company with operations in the Appalachian Basin, appreciated due to improved investor sentiment following an uptick in natural gas pricing. We maintain a position, as we believe the company’s low-cost acreage allows it to translate the healthy price environment into earnings and cash flow that is being used to reduce financial leverage, which can accrue additional value to equity shareholders in periods to come.”
As of Q1 2022, 36 funds held a stake in Range Resources Corporation (NYSE:R).
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