Cold Weather Should Buoy Natural Gas Stocks
NEW YORK (TheStreet) -- Natural gas futures are soaring Monday on speculation the government will report a record decline in natural gas inventories on Thursday.
Traders are betting that the recent cold temperatures in the U.S. resulting from the polar vortex will reduce inventories of the heating fuel significantly.
For speculators, traders, and investors looking to profit, there are various ways to invest in natural gas. They include long and short exchange-traded funds such as United States Natural Gas (UNG) and ProShares DJ-UBS UltraShort Natural Gas (KOLD).
Stocks include Cabot Oil and Gas (COG) and Southwest Energy (SWN), two of the top producers in the U.S., to Octagon 88 (OCTX:OTC) and Americas Petrogas (APEOF:OTC), two small-caps with promising production and holdings.
Analysts at Citi Futures Perspective estimate that supplies may have declined by 303 billion cubic feet in the week ended Jan. 10, according to a Bloomberg report. Such a decline would be larger than the 285 billion decrease reported in December. The Energy Information Administration plans to report last week's numbers on Thursday.
Long-term investors should be bullish about Octagon 88, Americas Petrogas, Southwest Energy, and Cabot Oil and Gas.
Southwest Energy is one of the largest natural gas producers in the U.S. With its low cost basis, Cabot Oil and Gas makes money even when natural gas prices are low. Americas Petrogas is a small-cap that has increasing production. The reserves of Octagon 88 in Canada are very promising with drilling moving along.Prices of these stocks have soared due to bullishness in the sector. Southwest Energy has risen by 18% over the last year. Over that period, Cabot Oil and Gas has spiked by nearly 55%. For the last year, Octagon 88 is up more than 86%. Americas Petrogas has more than doubled in the last six months. United States Natural Gas, the main exchanged-traded fund, has risen by about 8% over the past year.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts