Oil stocks are doing well this year, but it’s a different situation natural gas. That makes sense because natural gas is notoriously volatile.
Recently, natural gas prices have been pushed back by rising supplies and declining exports (the US is the largest exporter), among other factors. So it’s no surprise that some natural gas stocks are struggling. Down 15.1% in the month ending June 18 and 25.7% below its 52-week high, EQT (NYSE: EQT) belongs to that dubious group.
Missed Nvidia in 2009? This Rare Signal Lights Up Again. In 2009, a “Double Down” signal lit up a little-known chip maker called Nvidia. For the first time in years, that “Believe It All” signal is shining on a company 1/100 the size of Nvidia. Continue »
Price action like this could mean that this integrated natural gas producer is a falling knife or a name to ignore. However, there are reasons why investors may want to invest in this energy stock on their watch lists, because a drop in EQT may be a sign that market participants are ignoring an attractive underlying story.
Tests EQT’s return potential
EQT is one of the leading natural gas producers in the Appalachian Basin, with an enviable position in Ohio, Pennsylvania, and West Virginia. It differs from its competitors in that 90% of its production is dry natural gas, so it is exposed to wide fluctuations in the prices of that commodity. So this is not a stock for the faint of heart, but there are some sources of attraction.
The company also integrated its Equitrans midstream unit, resulting in a 15% reduction in unit costs. Some experts see it as a smart move because, now that EQT is a more integrated energy company, it can realize value in its various service areas while improving its revenue opportunities.
The Equitrans reassembly addresses another important point about the EQT, which is often lacking in some testing and production. oil stocks. The company specializes in manufacturing efficiency, as evidenced by a 13% decrease in resource costs in the first quarter. That and other accomplishments helped EQT generate $1.8 billion in free cash flow during that period.
Another consideration for patient investors is EQT’s potential to benefit from artificial intelligence (AI) trading. These days, it feels like most stocks are back-end AI plays, but EQT’s thesis works. The production site is close to the data center rich Northeast Corridor. If utilities in the region invest heavily in natural gas plants to meet power demand from data centers, EQT could benefit, as long as those investments occur in areas the company’s pipelines reach.
