Start of the Day with Chris Forte – Natgas

Posted on July 26, 2022 by Scott Shuda

Natural gas is up 16% in a week, up 60% this month, on pace for its best month since 2009. What do we make of this trend and how to invest?

Joe Terranova, Chief Market Strategist for Virtus Investment Partners said yesterday on CNBC, “I bought Valero (VLO) and EQT Corp (EQT). I already own Pioneer (PXD). “We’re coming into an expiration for nat gas, we’re coming into a critical time for hurricane season, and then we’ll be into winter season as well.

“EQT is a leading producer of nat gas for Marsellus and Utica, Free cash flow will accelerate. They have a low production cost. I suggest adding exposure to nat gas. Refiners are at peak capacity. Valero will report soon – cash flow is unprecedented. The margins are double what they were in 2004 to 2007.”

Gilman Hill Asset Management CEO Jenny Harrington added, “Chevron and Devon are minting cash. There is straight up supply demand constraints There is not enough supply. We need everything we can get. Our regulatory process is a disaster so not much is coming online.”

Harrington is a buyer of Williams Co (WMB). “They handle 30% of the average daily volume of gas through their pipelines.” WMB focuses on the transportation of natural gas. It is one of the largest midstream and pipeline operators and their important Transco pipeline is the largest pipeline system in the nation.

Antero Resources (AR) is an independent natural gas and oil company and originally discussed here in mid-2021 by Breakout Investor Florian Buschek. It proved to be a big winner and may deserve another look. Over the last 52 weeks it has climbed from $13 to a high of $48 in June but has corrected along with other energy companies. After dropping to $28 three weeks ago it has powered back to $39.
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QUICKIES
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Marko Kolonovic of JP Morgan says a mild recession is already priced in and “peak Fed pricing is behind us.” He says conditions “favors the growth style over value, and should be a clear support for overall market levels.”
*
Bradley Steveson posts “Wisdom of the Crowd – Dolphin Q1 Earnings Call.” It has some cool pie charts. One third of the respondents said they follow DLPN. The other two thirds said their favorite dolphin was Flipper.
*A comment on Seeking Alpha caught my eye: “I have been following oil for more than 20 years- that’s always been the case. Fundamentals rarely matter, the speculative froth drives the price far more than physical demand. In all commodities, sentiment matters most of all.” – Yakspeare
*22 years ago,
Palm was worth more than Apple and Amazon combined. Apple and Amazon went on to become 100 baggers. Palm, not so much. The PalmPilot PDA, the first of its kind, was discontinued inn 2011.
*MarketGyrations published “
Aehr Test Systems May Be Ahead Of Itself” on Seeking Alpha. Breakout Investor Ashleigh Day, our expert on AEHR says, “I disagree that guidance was soft, but am also confident they will exceed it, at least on a run rate basis.” My money is on Ashleigh.
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Paul Sorvino, best known for his role as mobster Paul Cicero in Goodfellas, died yesterday at age 83 of natural causes.

*It’s not a recession unless it’s from the Recession region of France otherwise it’s just sparkling misery. – SETH MANDEL

Good luck to all – Chris

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