By the chatter and constant talk on Wall Street about the upcoming possibility for an El Niño winter, or one where the weather pattern is warmer than usual, some investors may think that the Midwest and Northeast will be like Florida. In a new research report, not only does Credit Suisse play down the potential for a balmy winter, the firm thinks there could be a big opportunity.
In the report reminds investors that of the five El Niño weather events in the past 18 years, only one was warmer than normal. While forecasters are saying that a warmer start to November is likely, the El Niño is likely to produce greater cold in the northeast when and where it matters the most, January and February.
The bottom line is that at current spot pricing with some spot futures for natural gas pushed below $2 per MMBtu last week, the analysts think there is upside to this winter’s natural gas market. While they do acknowledge their own forecast of $4 per MMBtu is probably high, there could be money to be made between here and there.
We screened our own 24/7 Wall St. database for energy stocks levered to natural gas and found four that make sense to consider.
EQT Corp. (NYSE: EQT) is expected to have a stunning 99% of its production come in as natural gas. Its superior cost structure and above-average growth may help its exploit stable and rising natural gas prices. With an increasing reserve structure and a projected higher number of Marcellus wells to be drilled in the coming five years, the company exhibits industry-leading organic growth momentum.
With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology. This technology is designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint, something that is very shareholder friendly. Plus, the company is a low-cost producer with a very strategic midstream presence.
EQT’s midstream holdings are considered among the best in the industry. It completed the IPO of the general partner back in May and it carries an $8.3 billion valuation. With a $1.75 billion stake in Equity Midstream Partner, the company has a combined $10 billion in midstream holdings.
EQT investors are paid a small 0.2% dividend. The Thomson/First call consensus price target for the stock is $93.22. The stock closed Friday at $66.07.