We recently compiled a list of the Jim Cramer’s List of 7 Energy Stocks for the Trump Trade. In this article, we are going to take a look at where Coterra Energy Inc. (NYSE:CTRA) stands against the other energy stocks.
Jim Cramer, the host of Mad Money, recently shared his views on the future of the natural gas and oil sectors under President-elect Donald Trump’s administration, alongside a majority Republican Congress. Cramer expressed his belief that companies involved in the natural gas ecosystem will thrive as a result of this new political landscape. He pointed out that the United States is rich in natural gas resources, which can be produced cheaply.
While some may believe the country’s position in terms of natural gas production is lower than expected, Cramer noted that, due to the Biden administration’s unfriendly stance toward fossil fuels and a weaker global economy, the natural gas industry had underperformed for much of the year. However, Cramer is optimistic that this trend will soon shift. He emphasized that although the U.S. has vast natural gas reserves, there has been a lack of infrastructure to effectively transport the resource, a problem exacerbated by the Biden administration’s resistance to new pipelines.
This, according to Cramer, has hindered the industry. He specifically criticized the pause on new liquefied natural gas (LNG) export authorizations, calling it a stunning setback for one of the country’s strongest sectors, which provides thousands of high-paying jobs. He went on to say:
“The betting is that Trump’s going to undo that on day one, giving new life to all these LNG projects that really have been stuck in limbo.”
READ ALSO Jim Cramer’s Game Plan: 13 Stocks in Focus and Jim Cramer’s Lightning Round: 9 Stocks in Spotlight
Since the election, natural gas prices have surged more than 70%, although Cramer noted that this increase was partly driven by a cold snap after a warm fall and the delayed start to winter.
“Seasonally, this is a good time for the commodity but I also think there’s some optimism about the future of the industry driving this move.”
Cramer then shared his broader outlook, saying:
“But here’s the bottom line: We’re hearing about all sorts of Trump trades right now, and many of these things have made insane moves in less than three weeks, to the point where, actually, they’re feeling precarious to me.”
He went on to recommend natural gas as a more sustainable investment, emphasizing that while many sectors have already surged in the wake of the election, natural gas stands out as an industry with long-term potential. Cramer believes that with the incoming administration’s supportive stance toward the fossil fuel sector, the natural gas ecosystem will continue to thrive for years to come.
He suggested that investors should look to buy into producers, pipeline companies, and LNG export stocks, all of which he believes have further upside potential now that the regulatory environment has shifted.
“I bet they keep running for the next couple of years, not months. They have all moved but they’re nowhere versus where they could go now that Biden’s anti-fossil fuel team has been broomed for one that is totally supportive of this industry.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during a recent episode of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in 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).
An oil rig pumping under the open sky of the Permian Basin.
Coterra Energy Inc. (NYSE:CTRA)
Number of Hedge Fund Holders: 39
Cramer likes Coterra Energy Inc. (NYSE:CTRA) and expressed faith in the company’s ability to tackle any environment.
“I still very much like Coterra Energy, currently the only energy holding in my Charitable Trust… This is another exploration production play, although it’s more balanced between oil and gas. In fact, after a pair of acquisitions announced earlier this month, Coterra’s revenue mix will tip a bit more in favor of oil. Next year, we like to say it’s more oily, less gassy. It does happen to have the lowest cost natural gas of any company in our country and that’s because of the legacy of the old Cabot Oil & Gas which created Coterra when it merged with Cimarex and rebranded the combined company.
I like Coterra Energy because it’s one of the shrewdest operators in the industry. I trust them to handle whatever environment we already have, making it a great long-term holding. When reported late last month, Coterra announced that they’d signed three new liquified natural gas supply agreements to sell a total of 200 million cubic feet per day, indexed to international price points.
Now that’s huge because international price points are much, much higher than domestic ones. The actual sales won’t take place until 2027, 2028. That was a bummer to me, but… Look, they’re gonna unlock a lot of demand and I think it’s going to, it gives it a great, great glide path for the next couple years. When we spoke to Coterra’s CEO Tom Jorden a couple weeks ago, he told us that ‘there’s more of that to do’ and you know what that meant. That meant be patient, he’s gonna do some more deals but no deals that aren’t accretive.”
Coterra (NYSE:CTRA) is an independent oil and gas company engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids across the United States. In the third quarter, it made significant progress in its natural gas business by signing three new long-term agreements to sell a total of 200 MMcfpd (million cubic feet per day) of natural gas.
These sales are set to begin in 2027 and 2028. The natural gas from these deals will be sourced from the company’s existing production in the Permian Basin, Anadarko Basin, and Marcellus Shale. These new contracts are a key part of the company’s ongoing efforts to diversify its natural gas marketing strategy, providing exposure to international LNG pricing in European and Asian markets.
Additionally, on November 13, Coterra (NYSE:CTRA) announced it reached two separate definitive agreements to acquire assets from Franklin Mountain Energy and Avant Natural Resources, along with its affiliates, for a total of $3.95 billion. Upon completion of these acquisitions, the company’s net locations in New Mexico and the Permian Basin are expected to increase by approximately 75% and 25%, respectively.
The company also noted that these assets will contribute substantial oil volumes in 2025, boosting its production by about 60,000 to 70,000 barrels of oil equivalent per day. The transactions are anticipated to close in the first quarter of 2025.
Overall CTRA ranks 4th on Jim Cramer’s list of energy stocks for the Trump trade. While we acknowledge the potential of CTRA as an investment, our conviction lies in the belief that 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 CTRA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.