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Natural Gas Names Continue to Surge, Hits New 52-Week Highs

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Natural gas prices have been increasing in recent months, supported by a strong fundamental backdrop and geopolitical uncertainty. Futures for July delivery ended Friday at $8.85 on the New York Mercantile Exchange, rising almost 4% from the previous week’s closing. Natural gas recently eased past the $9 mark to its highest levels in nearly 14 years and is up a staggering 137% year to date.  

Building on this narrative, stocks of gas-focused equities like Comstock Resources (CRK - Free Report) , Southwestern Energy (SWN - Free Report) , CNX Resources (CNX - Free Report) , Antero Resources (AR - Free Report) and Range Resources (RRC - Free Report) scored new highs in previous week's trading.

Why Are Natural Gas Prices Trending Higher?

Investors might note that changes in temperature and weather forecasts can precipitate natural gas price swings. The latest models anticipate strong temperature-driven consumption over vast swathes of the nation in the weeks ahead, which is a positive for prices. An impending heat wave is expected to push across the Lower 48, leading to a spike in natural gas load demand to run air conditioners.

Natural gas remained supported by a stable demand catalyst in the form of continued strong liquefied natural gas (LNG) feedgas deliveries. LNG shipments for export from the United States have been robust for months on the back of environmental reasons and record-high prices of the super-chilled fuel elsewhere. Now, with the Russia-Ukraine conflict, LNG has become even more coveted. As a matter of fact, the United States entered into a partnership with the EU in March to export additional LNG to wean the bloc off its dependence on Russian natural gas supplies. This means LNG deliveries are poised to remain high during the near-to-medium term.

Looking at the supply side, production levels have consistently stayed around 2-3 billion cubic feet (Bcf) below the peak achieved in early-2022 and late-2021. Last week, daily natural gas output averaged 95.5 Bcf, well under the 97 Bcf high achieved during the final months of 2021. With the big upstream operators concentrating on free cash flow over production, volumes seem unlikely to recover soon.  

Which Stocks are Shining Bright?

Comstock Resources was one of the stocks to rack up a 52-week high of $22.11. CRK is active in the Haynesville shale in North Louisiana and East Texas — a premier natural gas basin.

Comstock, carrying a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 209.5% for this year. The Zacks Consensus Estimate for CRK’s 2022 earnings has been revised 43% upward over the past 60 days.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Southwestern Energy got in on the action, too, with the stock scoring a new 52-week high of $9.87 on Jun 8. SWN churns out in excess of 1 trillion cubic feet equivalent of hydrocarbons annually, 80% of which is natural gas.

Southwestern Energy beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 3.1%. SWN is valued at around $10.2 billion and has a projected earnings growth rate of 46.7% for this year.
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CNX Resources popped to its highest level in a year as shares changed hands at $24.21. The Pittsburgh-based natural gas producer has operations centered in the major shale formations of the Appalachian basin.

CNX is valued at around $4.5 billion and has a projected earnings growth rate of 86.3% for this year. The Zacks Consensus Estimate for CNX’s 2022 earnings has been revised 42.9% upward over the past 60 days.

Antero Resources is another stock to have hit a new 52-week high when its shares shot to $48.80. AR’s asset base is concentrated on the Appalachian Basin — the most-prolific domestic gas basin.

The company is valued at around $14 billion and has a projected earnings growth rate of 335.4% for this year. The Zacks Consensus Estimate for Antero Resources’ 2022 earnings has been revised 39% upward over the past 60 days.

Range Resources also scored a new 52-week high in Wednesday's trading. RRC has a strong footing in the prolific Appalachian Basin. In the gas-rich resource, the upstream firm has huge inventories of low-risk drilling sites that are likely to provide production for several decades.

Range Resources has a projected earnings growth rate of 130.2% for this year. The Zacks Consensus Estimate for RRC’s 2022 earnings has been revised 16.5% upward over the past 60 days.