The unseasonably warm weather across Europe and some parts of the United States drove natural gas prices down below $3 for the first time since May of 2021. Worries that suppliers would be unable to meet wintertime demands around the globe have been replaced by an unseasonably warm winter and other factors leading gas prices to drop more than 70%, after printing a 14-year high of $10.03 in August. This could all change fast, as an early February winter blast is expected.
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In fact, Uzbekistan is expecting the coldest winter weather in 50 years. In true Wall Street style, the financial press is declaring the natural gas trade dead and soon to be buried. While it may not trade back to $10, there is a good chance it will be back about $4 soon, maybe as early as this week.
We screened our 24/7 Wall St. energy research database looking for companies that are leaders in natural gas production and have stocks that have been sold off as the commodity traded lower. Five top stocks hit our screens, and all are rated Buy across Wall Street and come with solid and dependable dividends. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cheniere Energy
This top liquefied natural gas (LNG) play has backed up to levels not seen since the summer. Cheniere Energy Inc. (NYSEAMERICAN: LNG) is an energy company primarily engaged in LNG-related businesses. The company operates through two segments.
Cheniere’s LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. Its LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing.
Cheniere Marketing is developing a portfolio of long- and medium-term sale and purchase agreements with professional staff based in the United States, the United Kingdom, Singapore, and Chile. The company conducts its business through its subsidiaries, including the development, construction, and operation of its LNG terminal business and the development and operation of its LNG and natural gas marketing business.
Cheniere Energy stock investors receive a 1.06% dividend. Citigroup’s $205 price target compares with a consensus target of $202.50 and Friday’s closing share price of $150.26.
ALSO READ: These 5 Well-Known ‘Strong Buy’ Stocks Trading Under $10 Have Tremendous Upside Potential
Coterra Energy
This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
Coterra also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power generation facilities.
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As of December 31, 2021, it had proved reserves of approximately 2,892,582 thousand barrels of oil equivalent, which include 189,429 thousand barrels of oil and other liquid hydrocarbons, 14,895 billion cubic feet of natural gas and 220,615 thousand barrels of NGLs.
Shareholders receive a 9.83% dividend. Mizuho has a $41 target price on Coterra Energy stock. The consensus target is $31.71, and shares closed on Friday at $25.33.
EQT
This is the largest natural gas producer in the Appalachian Basin. EQT Corp. (NYSE: EQT) operates as a natural gas production company in the United States. It also produces NGLs and crude oil. As of December 31, 2021, it had 25.0 trillion cubic feet of proved natural gas, NGLs and crude oil reserves across approximately 2.0 million gross acres, including 1.7 million gross acres in the Marcellus play.
With more than 128 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.
Investors receive a 1.81% dividend. The Goldman Sachs price target is $44, while EQT stock has a consensus target of $51.86. Shares closed at $32.93 on Friday.
Kinder Morgan
This is one of the largest natural gas infrastructure companies in the world. Kinder Morgan Inc. (NYSE: KMI) operates through the following segments.
The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipelines and underground storage systems; natural gas gathering systems and natural gas processing and treating facilities; NGLs fractionation facilities and transportation systems; and LNG liquefaction and storage facilities.
Kinder Morgan’s Products Pipelines segment owns and operates refined petroleum products and crude oil and condensate pipelines, as well as associated product terminals and petroleum pipeline transmix facilities.
The Terminals segment owns or operates liquids and bulk terminals that store and handle various commodities, including gasoline, diesel fuel, chemicals, ethanol, metals and petroleum coke. It also owns tankers.
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The CO2 segment produces, transports and markets CO2 to recover and produce crude oil from mature oil fields, and it owns interests in or operates oil fields and gasoline processing plants, as well as operates a crude oil pipeline system in West Texas. It owns and operates approximately 83,000 miles of pipelines and 144 terminals.
Here, the dividend yield is 6.02%. The $21 TD Securities price target compares with a $20 consensus target. Kinder Morgan ended Friday trading at $18.66 a share.
ONEOK
The potential for a big natural gas rally could really lift this top energy stock. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and NGLs gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying master limited partnership, ONEOK Partners.
The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.
Many on Wall Street remain positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.
ONEOK stock comes with a 5.49% dividend. The Wells Fargo team has set its price target at $75. The $71.53 consensus target is closer to the most recent close at $68.24.
24/7 Wall St.Ovintiv
This off-the-radar name has undeniable positive prospects and looks cheap at current levels. Ovintiv Inc. (NYSE: OVV) engages in the exploration, development, production and marketing of natural gas, oil, and NGLs in the United States and Canada.
Ovintiv’s principal assets are in the Permian in West Texas, Anadarko in west-central Oklahoma and Montney in northeast British Columbia and northwest Alberta. Its other upstream assets are in the Eagle Ford in south Texas, Bakken in North Dakota, Uinta in central Utah, Duvernay in west central Alberta, Horn River in northeast British Columbia, and Wheatland in southern Alberta. The company was formerly known as Encana.
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Shareholders receive a 2% dividend. Ovintiv stock has a $71 price target at Wells Fargo. That is higher than the $66.67 consensus target and Friday’s $51.32 closing print.
Williams Companies
This top energy company is a solid pick for investors who are more conservative and looking for exposure to natural gas and LNG. Williams Companies Inc. (NYSE: WMB) operates as an energy infrastructure company primarily in the United States.
Its Transmission & Gulf of Mexico segment comprises Transco and Northwest natural gas pipelines, as well as natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing and fractionation activities in the Marcellus Shale region, primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio.
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