In this article, we will look at the 12 best gas stocks to buy according to hedge funds.
The Future of Natural Gas: Sustained Growth Ahead?
The global gas industry plays a crucial role in the energy landscape, providing a relatively cleaner alternative to coal and oil. As countries aim to reduce carbon emissions and transition to more sustainable energy sources, natural gas has become increasingly important. According to a report by The Business Research Company, the global natural gas market was valued at $1.029 trillion in 2023. The market is expected to grow at a compound annual growth rate (CAGR) of 7.7% during 2024-2028 to reach a value of $1.518 trillion by the end of the forecast period. The Asia-Pacific region was the largest market for natural gas globally in 2023.
The International Energy Agency’s 2024 Global Gas Security Review indicates that natural gas consumption rose by 2.8% in the first three quarters of 2024 compared to the previous year, surpassing the average growth rate of 2% seen from 2010 to 2020. Most of this increase came from rapidly growing markets in Asia. However, estimates show that the growth rate slowed to below 2% in the third quarter of 2024, partly due to a recovery in demand that began in late 2023 and also because higher gas prices affected consumption.
For the full year of 2024, global gas demand is projected to increase by over 2.5%, reaching a record high of 4,200 billion cubic meters (bcm). The Asia-Pacific region is expected to contribute nearly 45% of this additional demand. A significant portion of this growth is driven by industrial and energy use, supported by ongoing economic growth in Asia. Additionally, Europe’s industrial gas demand is recovering. Looking ahead, global gas demand is anticipated to rise by another 2.3% in 2025, with Asia continuing to play a crucial role in driving this growth.
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The demand for natural gas in the electric power sector is a major growth driver. Natural gas plants are more efficient and produce fewer emissions compared to traditional coal-fired plants. According to the US Energy Information Administration (EIA), in 2023, the United States consumed 32.50 trillion cubic feet of natural gas, which represents around 36% of the country’s total energy consumption. The electric power sector was the largest user, consuming approximately 40% of the total natural gas. Natural gas accounted for about 42% of the energy used in electricity generation in 2023.
In addition to this, innovations in extraction technologies, such as hydraulic fracturing and horizontal drilling, have made it easier and more cost-effective to produce natural gas. These advancements are enhancing supply capabilities and driving down costs, further supporting market growth.
With this background in mind, let’s take a look at the 12 best gas stocks to buy according to hedge funds.
An industrial facility emitting natural gas from large pipes, with workers in the foreground.
Methodology
To compile our list of the 12 best gas stocks to buy according to hedge funds, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the largest gas companies by market cap. We also consulted various online resources and reviewed our own rankings. This exercise provided us with a list of more than 30 gas stocks. We focused on the top 12 gas stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 12 best gas stocks to buy were then ranked in ascending order based on the number of hedge funds holding stakes in them.
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12 Best Gas Stocks To Buy According to Hedge Funds
12. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 48
Cenovus Energy Inc. (NYSE:CVE) is a Canadian oil and gas company with operations in Canada, the United States, and the Asia Pacific region. The company is a major producer of natural gas in the Western Canadian Sedimentary Basin, managing over 6 million net acres in Alberta and British Columbia. CVE ranks among the best energy stocks to buy.
In Q3 2024, the company demonstrated strong operational performance, generating nearly $2.5 billion in cash from operating activities. Cenovus Energy Inc. (NYSE:CVE) successfully completed its turnaround at the Christina Lake facility ahead of schedule, leading to an increase of 15,000 to 20,000 barrels per day. This efficiency showcases the company’s commitment to optimizing its operations. Additionally, Cenovus Energy Inc. (NYSE:CVE) completed a major turnaround at its Lima Refinery, ensuring continuous operations by connecting pipelines to the Toledo Refinery. The company also began production at two new well pads at the Sunrise project, which are expected to ramp up further in the fourth quarter.
Cenovus Energy Inc. (NYSE:CVE) continues to make progress on significant projects like the Narrows Lake tie-back pipeline, which is 93% complete and expected to add 20,000 to 30,000 barrels per day by mid-2025. The West White Rose project is also on track to resume production by the end of 2024. Cenovus Energy Inc.’s (NYSE:CVE) strong operational results and clear growth strategy make it an attractive investment opportunity.
11. Civitas Resources Inc. (NYSE:CIVI)
Number of Hedge Fund Holders: 48
Civitas Resources Inc. (NYSE:CIVI) is an independent oil and natural gas producing company. It is primarily focused on the Denver-Julesburg (DJ) Basin in Colorado and the Permian Basin in Texas and New Mexico. CIVI ranks among the best gas stocks to buy according to hedge funds.
In the third quarter of 2024, Civitas Resources Inc. (NYSE:CIVI) reported capital expenditures of $438 million, reflecting increased efficiency in its drilling and completion activities. The company successfully drilled 26 wells, completed 19, and turned 30 gross operated wells to sales in the Permian Basin. In the DJ Basin, Civitas Resources Inc. (NYSE:CIVI) drilled 14, completed 29, and turned 40 operated wells to sales. These achievements highlight the company’s commitment to enhancing production while managing costs effectively. Through the first nine months of 2024, Civitas Resources Inc. (NYSE:CIVI) has also expanded its portfolio by adding over 75 gross locations in the Delaware and Midland Basins through strategic transactions. This expansion positions the company for continued growth and improved production capabilities.
Production numbers indicate strong operational success, with Civitas Resources Inc. (NYSE:CIVI) expecting a 3% increase in oil volumes for the fourth quarter compared to Q3. In October, production averaged 165 MBbl/d, and the Blue 4AH well in the DJ Basin set a state record by producing 165 thousand barrels of oil within its first 90 days.
With its focus on efficient operations and growth, Civitas Resources Inc. (NYSE:CIVI) presents an appealing investment opportunity. The company is also notable for being Colorado’s first carbon-neutral oil and gas producer. The company’s commitment to sustainability, combined with its strategic expansions and operational efficiencies, makes it a solid choice for investors looking for a reliable energy stock with growth potential.
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