Jim Cramer, the host of Mad Money, recently shared his views on the future of the natural gas and oil sectors under President-elect Donald Trump's administration, alongside a majority Republican Congress. Cramer expressed his belief that companies involved in the natural gas ecosystem will thrive as a result of this new political landscape. He pointed out that the United States is rich in natural gas resources, which can be produced cheaply.
While some may believe the country’s position in terms of natural gas production is lower than expected, Cramer noted that, due to the Biden administration’s unfriendly stance toward fossil fuels and a weaker global economy, the natural gas industry had underperformed for much of the year. However, Cramer is optimistic that this trend will soon shift. He emphasized that although the U.S. has vast natural gas reserves, there has been a lack of infrastructure to effectively transport the resource, a problem exacerbated by the Biden administration's resistance to new pipelines.
This, according to Cramer, has hindered the industry. He specifically criticized the pause on new liquefied natural gas (LNG) export authorizations, calling it a stunning setback for one of the country’s strongest sectors, which provides thousands of high-paying jobs. He went on to say:
“The betting is that Trump's going to undo that on day one, giving new life to all these LNG projects that really have been stuck in limbo.”
Since the election, natural gas prices have surged more than 70%, although Cramer noted that this increase was partly driven by a cold snap after a warm fall and the delayed start to winter.
“Seasonally, this is a good time for the commodity but I also think there’s some optimism about the future of the industry driving this move.”
Cramer then shared his broader outlook, saying:
“But here's the bottom line: We’re hearing about all sorts of Trump trades right now, and many of these things have made insane moves in less than three weeks, to the point where, actually, they’re feeling precarious to me.”
He went on to recommend natural gas as a more sustainable investment, emphasizing that while many sectors have already surged in the wake of the election, natural gas stands out as an industry with long-term potential. Cramer believes that with the incoming administration’s supportive stance toward the fossil fuel sector, the natural gas ecosystem will continue to thrive for years to come.
He suggested that investors should look to buy into producers, pipeline companies, and LNG export stocks, all of which he believes have further upside potential now that the regulatory environment has shifted.
“I bet they keep running for the next couple of years, not months. They have all moved but they're nowhere versus where they could go now that Biden's anti-fossil fuel team has been broomed for one that is totally supportive of this industry.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during a recent episode of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A storage facility for natural gas, showing the vast reserves of this abundant energy source.
Cramer mentioned EQT Corporation’s (NYSE:EQT) stock “getting some buzz” even before the election and highlighted an acquisition by the company this year.
“First, you could own some producers. Now I happen to like a company called EQT, which is exclusively focused on natural gas operations in the Appalachian Basin across Pennsylvania, West Virginia, Ohio. After spending a couple years trading sideways, EQT has caught fire since the election, climbing 22% to its highest level since late 2022. Well, even before the election, this stock was getting some buzz. Bank of America reinstituted coverage with a buy rating in late October. Then the next day, EQT reported a terrific beat and raise quarter, which did shock me.
EQT (NYSE:EQT) is a prominent natural gas production company based in the United States, primarily engaged in the extraction and sale of natural gas and natural gas liquids. In March, the company entered into a definitive merger agreement with Equitrans Midstream Corporation to create a vertically integrated natural gas business with an enterprise value exceeding $35 billion.
For the third quarter, the company reported an adjusted EPS of $0.12, surpassing analyst expectations despite a net loss of $301 million. The company’s total operating revenue for the quarter reached $1.28 billion, an increase from $1.19 billion reported in the same period the previous year and it was largely attributed to higher operational capacity.
EQT (NYSE:EQT) also made significant progress on its operational objectives during the third quarter. Following the completion of its acquisition of Equitrans, the company reported that over 60% of the integration tasks had been completed, with more than 50% of the anticipated synergies from the deal already realized within just three months.
Overall EQT ranks 2nd on Jim Cramer's list of energy stocks for the Trump trade. While we acknowledge the potential of EQT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than EQT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
