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Top Natural Gas Stocks for Q4 2022

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Natural gas has long been a main source used in heating, cooking and electricity production. More recently, it has come to play an increasingly prominent role in industrial applications and even as a fuel source for automobiles. The United States Department of Energy estimates that approximately 23 million vehicles run on natural gas worldwide. It’s hard to find pure game natural gas companies, but many energy companies have large natural gas companies. Major players include Chesapeake Energy Corp., Antero Resources Corp. and Range Resources Corp.

The price of natural gas rose after the Russian invasion of Ukraine, as Russia is a major gas producer and has been subject to major sanctions ever since. Many of these companies are enjoying sharp upturns in revenue growth this year in the wake of the massive disruptions caused by the COVID-19 pandemic in 2020 and 2021.

Natural gas stocks, as measured by a benchmark publicly traded fund (ETF)— the First Trust Natural Gas ETF (FCG)—produced a one-year total return of 74.0%. This is well above the Russell 1000’s one-year total return of -13.1%. These figures and all data below are as of September 15, 2022.

Here are the top three natural gas stocks with the best value, fastest growth and most momentum. As mentioned, many of these companies are not pure natural gas names, but focus more than half of their production (or, in the case of midstream businesses, transit on natural gas.

These are the natural gas reserves with the lowest 12 months backlog price-to-sale (P/S) ratio. For early stage companies or industries experiencing major shocks, this can be used as a rough measure of a company’s value. A company with a higher turnover could eventually make more profit when it achieves or returns to profitability. The P/S ratio shows how much you pay for inventory for every dollar of sales generated.

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Best Value Natural Gas Stocks
Price ($) Market capitalization (market capitalization) ($B) 12 month ongoing P/S ratio
DCP Midstream LP (DCP) 38.11 7.9 0.6
Southwestern Energy Co. (SWN) 7.65 8.5 0.7
CNX Resources Corp. (CNX) 17.32 3.3 1.1

Source: YCharts

  • DCP Midstream LP: DCP Midstream is a midstream energy company that transports, trades, markets and stores natural gas liquids (NGLs) and related products. The company also collects, compresses, treats and processes natural gas. In early August, DCP Midstream announced financial results for the second quarter of 2022 fiscal year (FY), the three-month period ended June 30, 2022. The company reported $383 million in net revenue attributable to partners, compared to a loss the year before as total operating revenue more than doubled. The net cash flow from operating activities increased compared to the results for the second quarter of last year.
  • Southwestern Energy Co.: Southwestern Energy is an independent energy company. The company researches and produces natural gas, oil and related products. Southwestern Energy announced financial results in early August for the second quarter of FY 2022, the three-month period ended June 30, 2022. The company reported net profit of $1.2 billion compared to a net loss of $600 million in the quarter of last year, as revenue grew more than fourfold.
  • CNX Resources Corp.: CNX Resources focuses primarily on natural gas and researches, acquires and develops properties in the Appalachian Basin. On July 26, CNX Resources and Dynamis Power Solutions announced the first electrically powered drilling system in the Appalachian Basin. The drill will run entirely on natural gas produced on site.

These are the natural gas inventories with the highest annualized revenue growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow their revenues organically or by other means, and find growing companies that are not yet profitable. In addition, earnings per share (EPS) can be significantly affected by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be misleading about a company’s strength, as growing sales from money-losing companies can be detrimental if the company does not have a plan to become profitable. As the natural gas industry has quite recently turned around after net losses in several recent quarters, we focus on corporate revenue growth in the table below.

Fastest Growing Natural Gas Stocks
Price ($) Market Capitalization ($B) Revenue growth (%)
Coterra Energy Inc. (CTRA) 30.77 24.5 693.8
Earthstone Energy Inc. (ESTE) 15.29 1.7 427.0
Chesapeake Energy Corp. (CHK) 103.59 12.5 406.4

Source: YCharts

  • Coterra Energy Inc.: Coterra Energy Inc is a diversified energy company developing oil and gas properties. The company explores and produces oil, natural gas and NGLs.
  • Earthstone Energy Inc.: Earthstone Energy is an independent oil and gas company. The company is focused on acquiring and developing reserves in the Delaware Basin, Midland Basin and other areas.
  • Chesapeake Energy Corp.: Chesapeake Energy is an oil, gas and NGL manufacturing company exploring and developing onshore properties. On August 2, the company announced its financial results for the second quarter of 2022. Net income available to shareholders is $1.2 billion as total operating revenues more than fivefold, compared to a $400 million loss in the prior year quarter.

These are the natural gas reserves with the highest total return over the past 12 months. Companies with a total return of more than 2,500% were excluded as outliers.

Natural gas stocks with the most momentum
Price ($) Market Capitalization ($B) 12 months sequential total return (%)
Vermillion Energy Inc. (VETERINARIAN) 24.88 4.1 217.2
Antero Resources Corp. (AR) 39.76 12.2 124.1
Comstock Resources Inc. (CRK) 19.97 4.7 118.5
Russell 1000 N/A N/A -13.1
First Trust Natural Gas ETF (FCG) N/A N/A 74.0

Source: YCharts

  • Vermilion Energy Inc.: Vermilion Energy is a Canadian-based energy producer that researches, develops, acquires and produces properties of crude oil and natural gas. As of August 11, Vermillion Energy announced a 33% quarterly increase cash dividend payments to CA$0.08 ($0.06), payable October 17 for registered shareholders as of September 30.
  • Antero Resources Corp.: Antero Resources is an oil and natural gas company that researches and develops natural gas, NGLs and oil properties.
  • Comstock Resources Inc.: Comstock Resources is an oil and natural gas producer focused on northern Louisiana and eastern Texas in the Haynesville natural gas basin.

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