There has been a mounting clean energy demand that drives investors’ interest in natural gas stocks. This is because natural gas produces lower emissions than crude oil and coal, while generating an equivalent amount of energy. The rising clean energy demand is also aiding the pricing environment of natural gas, bolstering the outlook of energy players that are engaged in producing, transporting and storing the commodity. Given the backdrop, is this the ideal time to invest in upstream players like Comstock Resources, Inc. CRK and Energy Transfer LP ET?
Natural Gas Price to Jump This Year
In its latest short-term energy outlook, the U.S. Energy Information Administration (“EIA”) forecasted this year's natural gas spot price at $4.10 per million BTU, significantly higher than $2.20 in the past year. Rising exports of LNG from the United States primarily contributed to the commodity prices. The electric power sector also requires more natural gas, aiding the pricing environment.
In its first-quarter 2025 earnings transcript, upstream company EQT Corporation (EQT) highlighted the resilience of natural gas demand. EQT noted that during the coronavirus pandemic, industrial usage of natural gas slipped by less than 1 billion cubic feet per day, representing a dip of under 1% of the nation's total natural gas consumption. Natural gas’s resilience, which EQT mentioned, was possibly due to the commodity’s wide usage starting from heating homes, cooking and producing electricity.
Bet on 2 Energy Stocks Right Away: ET, CRK
With the commodity’s pricing environment remaining favorable and natural gas demand staying resilient, upstream energy companies will have incentives to ramp up exploration and production of natural gas to capitalize on the increasing demand for cleaner fossil fuels. With higher production, there will be greater demand for transportation and storage assets of midstream players.
Hence, it would be ideal for investors to bet on prospective natural gas producers and midstream players involved in transporting and storing the commodity. Here are two such stocks – CRK and ET – carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CRK’s Growth Potential Backed by Deep Drilling Inventory
Being a leading producer of natural gas, Comstock Resources is well-positioned to capitalize on the favorable pricing scenario of the commodity. Importantly, CRK has plenty of places left to drill for natural gas, spreading evenly across two prolific underground zones – Haynesville and Bossier. At the speed they’re drilling now, they’ve got enough future wells lined up to keep them busy for more than three decades.
Energy Transfer to Gain on Energy-Hungry Data Centers
Energy Transfer stands to benefit significantly from the rapid expansion of energy-hungry data centers across Texas, driven by explosive demand for artificial intelligence (AI), cloud computing and digital services. ET in its first-quarter 2025 earnings transcript mentioned that it is in active discussions with roughly 150 data centers and has already secured a natural gas supply agreement with CloudBurst, a flagship AI-focused data center project. This early traction highlights the partnership’s strong competitive position in meeting the next wave of electricity demand.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Comstock Resources, Inc. (CRK): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
