2 More Stocks to Profit From the Natural Gas Spike

Encana and Nuvista are taking steps in the right direction and beginning to see the fruits of their labour.

| More on:
The Motley Fool

To follow up on yesterday’s article, “Natural Gas Continues to Spike Higher — How Can You Profit?”, I would like to go further and look at two other energy stocks that I have owned for a while now and that have been performing really well lately, Encana (TSX:ECA)(NYSE:ECA) and Nuvista Energy (TSX:NVA).

Up on big volumes

Encana’s stock price has increased 10% year-to-date on higher than normal volumes. Are institutional investors finally getting back into the stock? The biggest volume in a long time was seen yesterday, with over 8 million shares trading and the stock increasing 1.6%, reaching a high of $21.22 in the day.

Nuvista’s stock price has increased 19.3% year-to-date also on higher-than-normal volumes.

The average price deck that analysts have been using for natural gas has been increasing in recent months as we come to the realization that these estimates for natural gas prices have been too low. This will lead to EPS estimates also rising and natural gas producers showing results that are better than expected.

Improving company fundamentals

The story for both stocks goes beyond natural gas prices; there are also company-specific improvements that both companies are implementing. Some characteristics that these companies share are:

  • Healthy balance sheets
  • Operational improvements: Encana expects a 10% increase in netbacks in 2014 due to cost reduction and capital efficiencies.
  • Strong production increases: Nuvista expects year over year production per share growth in 2014 is expected to be 15%.
  • Good resource base

Foolish bottom line

Renewed interest in these two names is, in my view, based on not only strength in natural gas prices but also the acknowledgement that both companies are taking steps in the right direction and beginning to see the fruits of their labour.

Encana is reporting fourth-quarter and year-end results on February 13, and Nuvista is expected to report in the beginning of March. Based on what I am seeing at this time, I believe that these results will surprise the market to the upside.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas owns shares in Encana and Nuvista.

More on Investing

think thought consider

TSX Stocks Are Still Dirt Cheap! 3 Bargains I’d Buy Today

TSX stocks like Well Health and BlackBerry are digitizing their chosen industries and effectively disrupting the landscape.

Read more »

investment research
Dividend Stocks

Better Buy: Scotiabank or TD Bank Stock?

Take a closer look at Scotiabank and TD Bank stock to determine which might be the better addition to your…

Read more »

retirees and finances
Dividend Stocks

How to Retire in a Bearish Market

Are you looking to retire this year but are skeptical because of the bearish market? Here is a way to…

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.

2 Seriously Misunderstood Value Stocks to Snap Up Before the Market Figures Them Out

Jamieson Wellness (TSX:JWEL) and another mid-cap stock are worth consideration for your TFSA.

Read more »

Target. Stand out from the crowd
Dividend Stocks

TFSA Investors: 2 Stocks to Buy if the Market Drops Even More

We still aren't in a recession, so we still haven't seen a market bottom. If these stocks drop even more,…

Read more »

analyze data

Why Brookfield Asset Management Could Be One of the TSX’s Best Value Stocks

Brookfield Asset Management (TSX:BAM) is a wonderful dividend-growth stock that's hiding in plain sight right now.

Read more »

Woman has an idea
Dividend Stocks

2 Dirt-Cheap Dividend Shares I’d Buy for Long-Term Passive Income

Dirt-cheap dividend stocks should be evaluated more thoroughly than their more stable counterparts for long-term dividend sustainability.

Read more »

stock research, analyze data
Dividend Stocks

3 Oversold Dividend Stocks (With a 7% Yield) I’d Buy Right Now

TSX dividend stocks such as Enbridge and TC Energy offer investors dividend yields of more than 7% in 2023.

Read more »