Ride the Clean Energy Demand With These 2 Natural Gas Stocks: ET, CRK

Driven by rising clean energy demand and increased LNG exports, the U.S. Energy Information Administration forecasts natural gas spot prices to jump to $4.10 per million BTU this year, significantly higher than last year's $2.20. The article highlights Comstock Resources (CRK) and Energy Transfer LP (ET), both with a Zacks Rank #2 (Buy), as well-positioned to capitalize on this favorable environment; CRK due to its extensive drilling inventory and ET due to its potential to benefit from the increasing demand from energy-hungry data centers.

Analysis

The natural gas sector is experiencing heightened investor interest, driven by increasing demand for cleaner energy sources and robust LNG export activity. The U.S. Energy Information Administration (EIA) projects a significant rise in the natural gas spot price to $4.10 per million BTU this year, a substantial increase from $2.20 in the prior year, underscoring a favorable pricing environment. This outlook is further supported by the resilient demand for natural gas, as highlighted by EQT Corporation's observation of minimal industrial usage decline even during the pandemic. Within this context, Comstock Resources, Inc. (CRK) and Energy Transfer LP (ET), both holding a Zacks Rank #2 (Buy), are presented as well-positioned. CRK, a leading natural gas producer, is set to capitalize on higher commodity prices, supported by an extensive drilling inventory across the Haynesville and Bossier shales, estimated to sustain operations for over three decades at current drilling rates. Energy Transfer is strategically poised to benefit from the burgeoning energy requirements of data centers in Texas, fueled by AI, cloud computing, and digital services; ET reported in its first-quarter 2025 earnings transcript that it is in active discussions with approximately 150 data centers and has secured a natural gas supply agreement with the AI-focused CloudBurst project, indicating strong early traction in this emerging demand segment.

Key Decisions for Investors

• Investors should consider the bullish outlook for natural gas, supported by EIA price forecasts and clean energy demand, when evaluating positions in Comstock Resources (CRK) and Energy Transfer (ET).
• CRK offers direct exposure to rising natural gas prices through its extensive production capabilities and deep drilling inventory, while ET presents a growth opportunity tied to the increasing energy needs of the data center industry, particularly in AI applications.
• Monitor natural gas spot prices, LNG export volumes, and specific company execution, such as ET's progress in securing further data center contracts, as key indicators for these investments.