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.”
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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).
7. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 26
Cramer highlighted Enbridge Inc.’s (NYSE:ENB) high yield and said that it is among the “safest dividends”.
“I actually want to pound the table on one that I think is getting little support… It’s called Enbridge…The Canadian company that transports nearly 20% of the natural gas consumed in the US and also operates North America’s largest natural gas utility, up by volume at least, serving customers in Ontario, northeast Ohio, Utah and North Carolina. For the pipeline business, the company has very strategically located assets, connecting the Gulf Coast to the eastern Midwest, meaning the Appalachian Basin… They also go across the Northeast.
They can get natural gas where it needs to go. Their system is just incredible. After spending a long time, I mean like a super long time in the doghouse, Enbridge has taken off in the back half of the year, rallying 22% since the end of June. Even after that move though, the stock supports a bountiful 6.1% yield. It’s one of the safest dividends around, totally covered by the cash flow. We’ve been with it the whole way for years now and have been able to get that juicy yield.”
Enbridge (NYSE:ENB) is an energy infrastructure company that operates pipelines, natural gas facilities, and renewable power generation assets, and provides commodity marketing and logistical services across North America. The company has earned a reputation as a dividend aristocrat, and growing its dividend annually remains a key consideration in its investment strategy. Management has set a target leverage range of 4.5x to 5x, considering this as the optimal level for the company.
Additionally, they maintain a distribution coverage ratio (DCF payout) between 60% and 70%, which aligns with the company’s cash flow-driven approach. During the latest earnings call, management mentioned that the company is expected to deploy between $8 billion and $9 billion annually for growth investments, with a focus on low-capital intensity projects, modernization, and rate-based investments. Over the next few years, approximately $6 billion to $7 billion of this capital will be directed toward projects such as expansion, pipeline modernization, and energy infrastructure.
Enbridge’s (NYSE:ENB) secured capital projects backlog currently stands at C$27 billion, including additions to oil terminal capacity, natural gas pipeline expansions, gas utility projects, and renewable energy initiatives. These projects are expected to come online by 2029. Furthermore, the company anticipates its EBITDA will grow annually by 7% to 9% through 2026, supported by ongoing expansion efforts and recent gas utility acquisitions.
6. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 29
Talking about Energy Transfer LP (NYSE:ET), Cramer said:
“Other than the producers, what works if you’re betting on a natural gas renaissance under Trump… How about a pure play on pipelines? Much easier to build these under a Republican administration. There are plenty of good options here. I’ve been consistently bullish on Energy Transfer and Kinder Morgan, they yield 6.8% and 4.0%, respectively.”
Energy Transfer (NYSE:ET) specializes in natural gas and crude oil transportation, with a large pipeline network and facilities in Texas, Oklahoma, and other states. In its third-quarter report, the company announced a significant increase in profit, driven by record volumes of crude oil transported through its systems. It reported net income of $1.18 billion, up from $584 million during the same period last year.
The company experienced growth in crude oil transportation, with exported crude volumes increasing by 49% year-over-year and total crude transportation volumes rising by 25%. Additionally, the company also saw a strong demand for its natural gas services. It received requests for connections from more than 90 power plants and data centers, which could represent an additional 16 billion cubic feet per day (bcf/d) of natural gas demand.
Energy Transfer (NYSE:ET) Co-Chief Executive Officer Tom Long noted that the growing demand for power, particularly driven by the expansion of AI data centers and power plants, is becoming increasingly visible across the company’s natural gas pipelines. Additionally, in a comment related to the broader oil and gas industry, the company’s co-CEO welcomed the election of Donald Trump as U.S. president, stating that his administration would bring “a breath of fresh air” to the oil and gas sector.
