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

edit Jars of marijuana
Cannabis Stocks

Is Tilray Stock a Buy in the New Bullish Market?

Canadian cannabis producer Tilray has underperformed the broader markets in the last five years due to its weak fundamentals.

Read more »

Woman has an idea
Investing

3 No-Brainer Stocks to Buy With $200 Right Now

These three stocks are no-brainer buys, given their solid underlying businesses and healthy growth prospects.

Read more »

Investing

2 Stocks I’m Loading Up on in 2024

Alimentation Couche-Tard (TSX:ATD) and another stock that are getting too cheap after their latest corrections.

Read more »

grow money, wealth build
Dividend Stocks

1 Top Dividend Stock That Can Handle Any Kind of Market (Even Corrections)

While most dividend aristocrats can maintain their payouts during weak markets, very few can maintain a healthy valuation or bounce…

Read more »

Red siren flashing
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

Three established dividend-payers from different sectors are compelling investment opportunities for income-focused investors.

Read more »

online shopping
Tech Stocks

1 Hidden Catalyst That Could Ignite Shopify Stock

Here's why Shopify (TSX:SHOP) ought to remain a top growth stock investors continue to focus on for the long haul.

Read more »

Oil pumps against sunset
Energy Stocks

Is it Too Late to Buy Enbridge Stock?

Besides its juicy and sustainable dividends, Enbridge’s improving long-term growth prospects make it a reliable stock to hold for the…

Read more »

Man considering whether to sell or buy
Tech Stocks

WELL Stock: Buy, Sell, or Hold?

WELL stock has a lot of upside as the company is likely to continue to grow, posting positive earnings in…

Read more »