Natural Gas Markets on the Rise
Energy stocks are experiencing a resurgence, particularly in the natural gas sector, which has seen prices increase significantly. Natural gas prices have soared more than 70% year-over-year and over 50% in the past three months. This rapid growth has intrigued investors, leading to renewed interest in this essential commodity.
Several factors contribute to this upward trend. For one, unusual winter weather has spiked seasonal heating demand in various regions. Additionally, strong liquefied natural gas (LNG) exports to Europe are fueled by ongoing supply concerns amidst geopolitical tensions. Lastly, the drive for artificial intelligence technologies is expected to support energy costs for the foreseeable future.
These catalysts favor natural gas producers who have persisted in their exploration efforts even during market fluctuations. Companies with solid financial health and production forecasts are well-positioned for the future. Here, we explore three noteworthy natural gas stocks to watch as this market evolves.
America's Largest Gas Producer Primed for Growth
Expand Energy Corp. is not an immediately recognizable name in every investor's portfolio, but it is poised to capitalize on the booming demand for natural gas. With superb performance so far, EXE stock has risen 17.8% YTD and is tracking to achieve annual growth of approximately 23%, alongside an impressive five-year total return surpassing 267%.
The company emerged from the merger of Chesapeake Energy and Southwestern Energy, establishing itself as the largest producer of natural gas in the U.S. Investors may have reservations about EXE due to Chesapeake's rocky past, including a stint in bankruptcy. Nevertheless, Expand Energy is demonstrating enhanced operational efficiencies that safeguard its future.
The company aims to generate $500 million in annual synergies this year and anticipates around $600 million next year, projecting a 30% increase in free cash flow this year and 20% in 2026.
Impressively, Expand Energy’s revenue has surged 358% year-over-year through the first three quarters of 2025. While the stock's price-to-earnings (P/E) ratio stands at 33x—above typical industry benchmarks—the impressive 312% earnings growth forecasted makes it an appealing option for investors.
Capitalizing on Permian Basin Demand
Diamondback Energy Inc. has had a year of performance that lagged overall market trends—but changes may be on the horizon. Analysts point to a consensus price target of $188.55, signaling potential growth of over 27% from current stock levels.
In the past month, Diamondback's stock has shown signs of recovery, increasing about 3.8% following a solid earnings report. The company recorded revenues that exceeded market expectations by more than 11%, and earnings per share surpassed estimates by 4.7%.
Key drivers for Diamondback's optimism are its significant ties to the Permian Basin and participation in the Competitive Power Ventures project, slated to supply 50 million cubic feet per day to a major 1,350-megawatt power plant. They are also aiming for long-term contracts catering to the expanding data center demand, an essential growth area for natural gas consumption.
Diamondback Energy is committed to free cash flow growth per share rather than simply increasing production. Q3 reports illustrate this commitment with a year-to-date reinvestment rate of 36% under stable oil prices, showcasing its disciplined capital management focused on maximizing shareholder returns.
Recovering Midstream Player Positioned for Opportunity
ONEOK Inc. offers a more conservative approach to tapping into the natural gas momentum. Despite a 30% decrease in stock value throughout 2025, analysts maintain a bullish outlook with a consensus price target of $89.27, indicating possible gains of over 28%.
In 2025, ONEOK has reported robust revenue growth, yet high projected capital expenditures created hesitation among investors. The company anticipates this expense level will dwindle in the future, but concerns linger about its short-term earnings impact.
Interestingly, the current market position may be attractive enough for investors considering future crude oil price gains expected in the next 12 to 18 months. With a strong earnings performance and the growing need for natural gas infrastructure, ONEOK may represent a significant investment opportunity in an industry on the rebound.
Frequently Asked Questions
What drives the current rise in natural gas prices?
Natural gas prices are rising due to increased demand caused by winter weather, strong LNG exports, and growing concerns about global supply.
Why should investors consider Expand Energy Corp.?
Expand Energy Corp. is positioned well with strong revenue growth, improved operational efficiencies, and positive cash flows, making it a compelling investment opportunity in the natural gas sector.
What is driving Diamondback Energy's stock performance?
Diamondback Energy's stock performance is buoyed by its exposure to the Permian Basin, compelling earnings reports, and strategic contracts related to growing data center demand for natural gas.
What does the future hold for ONEOK Inc.?
ONEOK Inc. may be on the rebound due to high demand for natural gas infrastructure and anticipated crude oil price increases, potentially leading to stock price recovery.
How can natural gas companies sustain growth?
Natural gas companies can sustain growth through operational efficiencies, strong revenue management, and adapting to market demands, including renewable energy initiatives.
