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Investors searching for prospects to strengthen their portfolios should consider the top natural gas stock picks.
That's because these stocks will benefit from rising natural gas prices in 2014.
Here are some factors contributing to the climb – and why we're predicting natural gas stocks will bring a huge windfall for investors this year…
Why Natural Gas Stocks are Soaring
One of the main reasons that natural gas stocks are hot right now is because numerous utilities are changing from "dirty" coal to the less expensive, cleaner burning fuel.
Additionally, with both commercial and residential consumers boosting their demand, natural gas stocks grow ever more promising options for investors. The Energy Information Administration forecasts that natural gas demand in the U.S. might reach 26.55 trillion cubic feet by 2035.
And while North America's natural gas transformation in shale-oil site development keeps moving along, hydraulic fracturing has altered the game for the energy industry. The exploration and production (E&P) sector is also forging ahead using fracking and other progressive drilling methods, causing production figures and reserves to continue to elevate.
In the meantime, the boon of liquefied natural gas (LNG) overseas sales and an increase in sales of natural gas-fueled vehicles are factors upping the bottom lines for natural gas companies.
Note:The Fed's 2014 taper means volatility ahead. So we've outlined how to find profits in a volatile market – like triple-digit gains in just days – if you start with this strategy…
To take advantage of the sector boom, here are some natural gas stock picks to get you started – they're companies involved with one of the most profitable regions for natural gas production…
Top Natural Gas Stock Picks
A particular manufacturing division in the Marcellus Shale in eastern U.S. is producing at elevated and steady levels.
"Technological advancements since the early 2000s have allowed U.S. natural gas producers to reshape the industry largely through the development of the Marcellus," wrote Moody's analyst Michael Sabella in a March 3 report. "The Marcellus has emerged as one of the most profitable regions in the U.S. for producing natural gas, so even if prices return to the weak levels of 2012, [natural gas stocks] will be rewarded."
Here are some natural gas stock picks emanating from the Marcellus region.
- EQT Corp. (NYSE: EQT)
Not too long ago, EQT broadcasted plans to spend $1.1 billion in 2014 to drill 186 wells within the Marcellus. EQT owns 560,000 acres in the region. So far, EQT's Marcellus developments raised its production operating revenue by 98% in 2013 and forecasts slate the company's revenue to get another 66% boost in 2014. EQT recently traded at $101.37 per share, with a dividend yield of 0.10%.
- Range Resources Corp. (NYSE: RRC)
Range Resources has roughly 1 million acres in a segment of the Marcellus in Pennsylvania. In 2013, the company stepped up production output by 37% compared to the year before, reaching a production level of 968 million cubic feet of natural gas daily. Furthermore, RRC has a few projects expected to boost production even more in the years to come. RRC recently traded at $85.59, with a dividend-yield of 0.20%.
- Anadarko Petroleum Corp. (NYSE: APC)
Anadarko was managing 61 wells on 260,000 acres in the Marcellus in 2013, and its sales growth volume was up 58% on the year. APC recently traded at $97.29, with a dividend yield of 0.70%.
- Antero Resources Corp. (NYSE: AR)
Antero recently had an initial public offering in October 2013, and its stock has ascended to a solid 23.46% since. The company is currently a key player in the Marcellus with production expected to increase from 60% to 65% in 2014, and 30% to 50% through 2016. AR recently traded at around $64.14, and as of yet does not pay a dividend.
- Chesapeake Energy Corp. (NYSE: CHK)
Chesapeake's fourth-quarter natural gas production in the Marcellus increased 36% year-after-year to 880 million cubic feet of gas daily. CHK recently traded at $25.81 with a dividend yield of 1.30%.
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