Tags: natural.gas | stocks | prices

Barron's: 3 Natural-Gas Stocks to Buy Despite Price Plunge

Barron's: 3 Natural-Gas Stocks to Buy Despite Price Plunge
(Sonic770/Dreamstime)

By    |   Wednesday, 09 October 2019 11:53 PM

Despite the historic plunge in natural-gas prices, one analyst investors can still profit from the increasing use of natural gas.

The key is to buy the stocks of natural-gas utilities that distribute gas for heating and should benefit as it becomes more ubiquitous, Barron’s explained.

Natural-gas futures are down 52% since hitting 52-week highs in November, falling to $2.30 per million BTUs earlier this week. There’s a supply glut that may only be getting worse.

And while companies that produce natural gas are suffering, Maxim analyst Tate Sullivan sees opportunity in other stocks, Barron’s said.

Natural-gas utilities, which distribute natural gas to homes via 6-inch pipes, are able to pass price changes along to consumers. Their fortunes rise and fall based on the number of customers they serve, so if more people switch to natural gas as prices fall, these utilities should benefit .

With that in mind, Sullivan likes Chesapeake Utilities (CPK), Northwest Natural Holding (NWN), and South Jersey Industries (SJI), all of which count on natural gas for the bulk of their revenue. All three have risen between 13% and 17% this year. Chesapeake’s dividend yield is 1.7%, Northwest’s is 2.9%, and South Jersey’s is 3.5%.

Asked if those dividends are safe, Sullivan said “absolutely.”

Meanwhile, U.S. dry natural gas production will rise to an all-time high of 91.63 billion cubic feet per day (bcfd) in 2019 from a record high of 83.39 bcfd last year, the Energy Information Administration said in its Short Term Energy Outlook (STEO) on Tuesday.

The latest output projection for 2019 was up from EIA’s 91.39 bcfd forecast in September, Reuters explained.

EIA also projected U.S. gas consumption would rise to an all-time high of 84.25 bcfd in 2019 from a record 81.86 bcfd a year ago.

The 2019 demand projection in the October STEO report was down from EIA’s 84.51 bcfd forecast for the year in September.

EIA projected output in 2020 would rise to 93.50 bcfd, and demand would rise to 84.96 bcfd.

The agency forecast U.S. net gas exports would reach 4.6 bcfd in 2019 and 7.2 bcfd in 2020, up from 2.0 bcfd in 2018. The United States became a net gas exporter in 2017 for the first time in 60 years.

The EIA projected gas would remain the primary U.S. power plant fuel in 2019 and 2020 after supplanting coal in 2016.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Despite the historic plunge in natural-gas prices, one analyst investors can still profit from the increasing use of natural gas.
natural.gas, stocks, prices
394
2019-53-09
Wednesday, 09 October 2019 11:53 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved