Time to Buy This Natural Gas Stock

Now's a perfect time to buy into our favorite natural gas stock, as another part of the energy sector continues to slump...

You see, while energy stock bears point to the dismal performance of oil stocks as a reason to leave the sector entirely, they're wrong.

It's true oil stocks have been hit hard. Oil prices have tanked since June, down 21%. WTI and Brent crude both hit multi-year lows this month.

U.S. oil drillers like EOG Resources Inc. (Nasdaq: EOG) and Continental Resources Inc. (NYSE: CLR) have fared poorly despite surging production. Those two stocks are down 18% and 26% respectively from summer highs. Even Exxon Mobil Corp. (NYSE: XOM) stock is down 9% since June.
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But while prices dip in the crude oil market, Money Morning's Global Energy Strategist Dr. Kent Moors predicts natural gas prices will climb as we reach the winter months.

"With natural gas, the NYMEX price was above $4 per 1,000 cubic feet (or million BTUs) in early October," Moors said. "As we move into a winter heating cycle, that should push prices closer to $4.50."

Natural gas at $4.50 would be an increase of nearly 23% from today's price of $3.65 per million BTUs.

Part of that price projection is based on higher demand. Supplies of natural gas have increased - just like oil - but the demand is a different story.

"What makes the gas picture different from oil are appreciable increases emerging on the demand side," Moors said. "From the rise of U.S. liquefied natural gas (LNG) exports to both Europe and Asia beginning in 2015 to the transition well underway from coal to gas in the generation of electricity, the ability to produce more unconventional gas is being met by a rise in the demand curve."

"There is a range of profitable moves about to hit," Moors continued. "Natural gas normally doesn't have the sizzle that crude oil has among investors. Of course, making money tends to change that real fast."

To find the best natural gas stock to buy now, it's best to look beyond the obvious choices...

Our Favorite Natural Gas Stock to Buy Now

A lot of investors look toward big names like Chevron Corp. (NYSE: CVX) when they pick energy stocks.

CVX is a $215 billion company and is active in the natural gas sector. According to the company, it produced 5.19 billion cubic feet per day in 2013. It's also involved with the production, liquefaction, shipping, and regasification of natural gas.

But that doesn't make it the best stock to buy now.

You see, Chevron is also a huge oil company. And the recent oil price pullback has weighed heavily on CVX stock.

Year to date, CVX is down 7.9%. More recently, it's dropped 14% from the 52-week high it set in July. CVX stock will continue to sputter as oil remains low.

Another natural gas play that Wall Street is quick to point out is the United States Natural Gas Fund LP (NYSE: UNG). Essentially, the fund tracks the spot price of natural gas. When prices rise, investors can find decent profits.

UNG is definitely a safe way to play a rise in natural gas. It will deliver some gains, but not the type of profits this stock can...

Right now, Moors recommends Cheniere Energy Inc. (NYSE: LNG).

Cheniere is a liquefied natural gas company that owns and operates the Sabine Pass LNG terminal in Louisiana. The company is also developing an export facility in Corpus Christi, Texas.

The U.S. Department of Energy and the Federal Energy Regulatory Commission have already approved 36 applications for exports, and more are pending. But Cheniere was the first company to receive Energy Department approval to export to countries that don't have a Free Trade Agreement with the United States.

"You see, just seven years ago, everyone agreed that the U.S. would be using LNG imports to meet 15% of its gas needs by 2020," Moors said. "Now, even Russia's gas behemoth Gazprom acknowledges that the U.S. could be providing between 8% and 12% of all worldwide LNG exports in just six short years. That's up from zero LNG exports today."

As the first company to receive approval, Cheniere has a huge leg up on its competition. It is already locked into five 20-year export contracts with importers in Europe and Asia.

Right now, Cheniere is in the process of transitioning its import facilities into export facilities. Once construction is finished, exports can begin.

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When the first part of the project is completed by the end of 2015, Cheniere will be processing more than 1 billion cubic feet of natural gas per day. That total will double when the project is completed in 2016/2017.

Moors expects LNG stock to remain volatile in the short term, as natural gas prices steady themselves. But Cheniere is an excellent long-term play.

Year to date, LNG stock is up 69%. That is just the start for this natural gas stock.

More from Dr. Kent Moors: Something is now afoot in the Pacific Northwest that will change how we think about pricing oil - and provide a range of fantastic opportunities for investors. Make no mistake: The U.S. oil export surge is coming...