Dominion Resources, Inc. (D): Is This Company Headed Higher?

Dominion Resources, Inc. (NYSE:D) is a unique natural gas play, since the company is selling, transporting, and using natural gas. Its Blue Racer midstream joint venture offers a rare opportunity for vertical investment, potentially boosting sales as a result of pricier natural gas.

However, any longer-term price increase could have a negative effect on demand, reducing overall natural gas consumption. To globalize its price risk, Dominion is busy expanding its LNG export options, lobbying Congress, and creating 20-year agreements with Indian and Japanese corporations.

TECO Energy, Inc. (NYSE:TE) is to coal stock as Dominion is to natural gas stock, with coal-centric capacity (61%) and mines in Kentucky, Tennessee, and Virginia. Rising natural gas prices are expected to increase coal demand by 7.8% for 2013, but a lack of modernization could leave TECO Energy, Inc. (NYSE:TE) shareholders hung out to dry if coal becomes cost-ineffective a second time around.

Exelon Corporation (NYSE:EXC) offers what neither Dominion nor TECO can: diversity and cost effectiveness. Rising natural gas prices are putting nuclear back in the competition, and the utility’s capital expenditures are keeping its overall operations up to par with its peers.

Foolish bottom line
Dominion’s shares barely budged last week, despite misses on sales and EPS. Short-term costs pushed the utility’s earnings down, but the long-term outlook remains much the same. Dominion Resources, Inc. (NYSE:D) bulls are betting big on this natural gas stock, but investors will need to watch prices and policy closely as domestic competitiveness and export possibilities play out over the next year.

The article Dominion Earnings: Is This Natural Gas Stock Headed Higher? originally appeared on Fool.com and is written by Justin Loiseau.

Motley Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Dominion Resources, Exelon, and Southern.

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