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TheStreet Open House

Three Companies That Should Benefit From Higher Natural-Gas Prices

Stocks in this article: CHKUNGXOMIRM

NEW YORK (TheStreet) -- After increasing by 26% in 2013, natural-gas prices continue to rise in the new year due to record cold temperatures around the U.S.

United States Natural Gas Fund (UNG), an exchange-traded fund for the sector, as well as natural-gas producers Chesapeake Energy (CHK) and Exxon Mobil (XOM), should benefit from rising prices. So should Iron Mountain (IRM), which supplies records for companies that are building pipelines needed to transport natural gas. There's a shortage of pipelines, which is why prices for natural gas will rise.

In cold weather, more natural gas is used to heat businesses and homes. When it is hot, more electricity is consumed for air conditioning. That, too, should lead to higher natural-gas prices because natural gas is replacing coal in more utilities across America. Natural gas is more competitive in pricing than coal is and causes less damage to the environment.

Among stocks of companies in the sector, shares of Chesapeake Energy are up more than 50% over the last year due in part to the company's vast natural-gas resources.

Meanwhile, Exxon Mobil is the largest natural-gas producer in North America, and it is focusing on natural gas as a cleaner fuel.

More pipelines are being built, which is where Iron Mountain -- the leading records-management company in the U.S. for pipelines -- comes in. Companies will need lots of records to comply with the extensive regulations for building pipelines.

At the time of publication, the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Jonathan Yates has written for numerous publications including Newsweek and The Washington Post. He is a former general counsel for a publicly traded corporation. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate. He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.

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