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.
5. Sempra (NYSE:SRE)
Number of Hedge Fund Holders: 33
Cramer mentioned that he likes Sempra (NYSE:SRE) and highlighted its diversified portfolio.
“I also like Sempra, which is a more diversified power company but has plenty of nat-gas exposure through regulated gas utilities in California, big nat-gas pipeline network that helps bring gas to Mexico. Can you believe that they need our natural gas after being so big in it? But they haven’t done any of the infrastructure. It’s also got a growing portfolio of LNG export facilities in both the US and Mexico. This is another name that’s broken out since the election, straight up actually, also up 15%. Now I would be a little more cautious. I’d buy some and then wait for it to come down.”
Sempra (NYSE:SRE) is an energy infrastructure company that provides electric and natural gas services, manages electricity transmission and distribution, and develops energy infrastructure to support the global energy transition. Recently, the company reported its third-quarter earnings, with adjusted earnings reaching $566 million, or $0.89 per diluted share. This compares to $685 million, or $1.08 per diluted share, reported in the same period of 2023.
The company also made significant progress in expanding its energy infrastructure. It announced the expansion of the GRO pipeline, which is expected to begin commercial operations before the end of this year. This pipeline is designed to support liquefied natural gas (LNG) exports at the Energia Costa Azul (ECA) facility. In addition, Sempra Infrastructure’s Port Arthur LNG Phase 2 development is advancing ahead of the Cameron LNG expansion in Louisiana.
According to Sempra’s (NYSE:SRE) CFO, Karen Sedgwick, the Port Arthur project in Texas is moving faster due to a continuous construction agreement with Bechtel that spans both phases of the project. While talks are ongoing for LNG purchases and equity agreements related to the Port Arthur project, Sedgwick noted that the timing for finalizing the financial go-ahead for the Cameron expansion remains uncertain.
However, the company has growing confidence that the non-Free Trade Agreement export permit for Port Arthur Phase 2 will be received early next year. CEO Jeffrey Martin further emphasized that they expect to secure the necessary permits for Port Arthur Phase 2 within the first half of next year.
4. 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.
3. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 42
Cramer suggested that pipelines could be a strong investment for those anticipating a natural gas boom under Trump, including Kinder Morgan, Inc. (NYSE:KMI),
“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.”
Kinder Morgan (NYSE:KMI) is an energy infrastructure company, focusing on the transportation, storage, and processing of natural gas, petroleum products, and other commodities, along with CO2 production and related facilities. The company operates one of the largest natural gas transmission networks in the United States, holding an interest in or managing approximately 79,000 miles of pipelines and 139 terminals.
It also oversees 702 billion cubic feet (Bcf) of working natural gas storage capacity and generates about 6.1 Bcf of renewable natural gas annually, with another 0.8 Bcf in development. Additionally, the company transports more than 40% of the country’s natural gas production. The company has a strong project pipeline, with a backlog valued at $5.1 billion.
According to Kinder Morgan (NYSE:KMI) management, there are considerable growth opportunities in natural gas, particularly in areas such as LNG exports, cross-border exports to Mexico, power generation, and industrial demand. The company is currently involved in discussions about power opportunities that could exceed 5 Bcf a day, and its internal projections suggest an overall growth of approximately 25 Bcf a day in the natural gas market over the next five years.
2. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Holders: 48
Cramer mentioned EQT Corporation’s (NYSE:EQT) stock “getting some buzz” even before the election and highlighted an acquisition by the company this year.
“First, you could own some producers. Now I happen to like a company called EQT, which is exclusively focused on natural gas operations in the Appalachian Basin across Pennsylvania, West Virginia, Ohio. After spending a couple years trading sideways, EQT has caught fire since the election, climbing 22% to its highest level since late 2022. Well, even before the election, this stock was getting some buzz. Bank of America reinstituted coverage with a buy rating in late October. Then the next day, EQT reported a terrific beat and raise quarter, which did shock me.
Earlier this year, EQT made a pipeline acquisition buying Equitrans, all stock deal valued the combined company [at] more than $35 billion, that closed in July. In the latest conference call, EQT CEO, Toby Rice, a real smart fellow… about the merger [said]… I’m gonna quote, ‘Transform EQT into America’s only large scale, vertically integrated natural gas business’, and true, before noting that the integration is well underway and saying that all sorts of efficiencies are being unlocked along the way. If the natural gas rally truly has legs, then I gotta tell you: EQT (is a buy).”
EQT (NYSE:EQT) is a prominent natural gas production company based in the United States, primarily engaged in the extraction and sale of natural gas and natural gas liquids. In March, the company entered into a definitive merger agreement with Equitrans Midstream Corporation to create a vertically integrated natural gas business with an enterprise value exceeding $35 billion.
For the third quarter, the company reported an adjusted EPS of $0.12, surpassing analyst expectations despite a net loss of $301 million. The company’s total operating revenue for the quarter reached $1.28 billion, an increase from $1.19 billion reported in the same period the previous year and it was largely attributed to higher operational capacity.
EQT (NYSE:EQT) also made significant progress on its operational objectives during the third quarter. Following the completion of its acquisition of Equitrans, the company reported that over 60% of the integration tasks had been completed, with more than 50% of the anticipated synergies from the deal already realized within just three months.
1. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 62
Cramer called Cheniere Energy, Inc. (NYSE:LNG) the “best player” for liquified natural gas exports and said:
“Finally, with the new more fossil fuel-friendly administration coming in, I think it’s time to start thinking about the direct liquified natural gas export players. Again, we’ve liked them for a long time, probably we were the first to like them in the whole country and the best player’s the one we first recommended, which is Cheniere Energy. They were a first mover and have a nice lead when it comes to nat-gas exports actually happening right now. The stock traded sideways from the mid 2022 until the middle of this year but it’s gained a more or mere 15%, anyway you wanna look at it, since the election, reached new all time highs.”
Cheniere Energy (NYSE:LNG) plays a prominent role in the liquefied natural gas (LNG) infrastructure industry in the United States, particularly through its ownership and operation of major LNG terminals. As of September, the company reached a significant achievement with the production and loading of its 1,000th LNG cargo from the Corpus Christi LNG terminal. This cargo was delivered to Italy, marking a milestone in the company’s expanding export activities.
Since it began operations in 2016, Cheniere Energy (NYSE:LNG) has exported a total of approximately 3,720 LNG cargoes from both the Sabine Pass and Corpus Christi terminals. These shipments have been delivered to nearly 40 markets worldwide. In the third quarter and the first nine months, the company exported 568 TBtu and 1,723 TBtu of LNG, respectively, from its liquefaction projects.
While we acknowledge the potential of Cheniere Energy, Inc. (NYSE:LNG) 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 LNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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