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U.S. natural gas prices are on fire this month, surging by about 50% to reach $3.40 per million British thermal units as of Nov. 21, the highest level in over a year.

November is poised to mark the strongest surge in natural gas at the Henry Hub pricing point since July 2022, fueled by heightened geopolitical tensions, unseasonably cold U.S. weather and rising export demand.

For investors, this sharp price rebound has cast a spotlight on natural gas stocks poised to benefit from the renewed momentum in the natural gas markets.

Why Are Natural Gas Prices Spiking?

The price rally has been driven by a combination of factors:

• Plunging Temperatures Across the U.S.: After a relatively warmer-than-average start to the winter, the situation has drastically changed over the past few weeks. The National Oceanic and Atmospheric Administration forecasts the first major snowfall of the season for parts of the central and northern Appalachians, with lower elevations in Pennsylvania and New York also bracing for accumulation. This colder weather has pushed demand for heating sharply higher.
• Geopolitical Tensions Between Russia and Ukraine: Russia's launch of an intercontinental ballistic missile on Thursday, combined with Ukraine’s recent use of Western-made missiles to target Russian territory, has added a geopolitical risk premium to natural gas markets.
• Supply Concerns in Europe: Austria’s OMV Group revealed earlier this month that it will stop receiving natural gas volumes from Russia’s Gazprom, reigniting fears of winter supply shortages in Europe and potentially shifting demand to the U.S. for liquefied natural gas (LNG) exports.

7 Natural Gas Stocks Benefiting From The Rally

As natural gas prices rally, several U.S. energy companies stand to gain from higher commodity prices and increased demand. Here are seven stocks to watch:

1. EQT Corporation

EQT is the largest natural gas producer in the U.S., with operations in the Appalachian Basin. The company benefits directly from higher domestic gas prices.

Shares of EQT Corp. are up 30% month-to-date, on track for their strongest performing month since March 2022.

2. ONEOK, Inc.

As a midstream operator, ONEOK processes and transports natural gas, profiting from higher pipeline volumes as demand increases.

Shares of ONEOK Inc. are up 19.6% in November, eyeing their best monthly performance since November 2020.

3. Targa Resources Corp.

Targa specializes in natural gas gathering and processing, positioning it to benefit from both domestic demand and export growth.

Targa shares have rallied 24% this month, on track to notch the 10th straight positive month and the strongest one in four years.

4. Kinder Morgan, Inc.

One of the largest pipeline operators in the U.S., Kinder Morgan’s infrastructure is critical for natural gas transportation across regions.

Kinder Morgan has seen its stock rally 16% in November, potentially positioned for the best month since November 2020.

5. Antero Resources Corporation

Focused on natural gas and liquids production, Antero Resources has significant exposure to the Appalachia region, where colder weather is driving demand.

Shares of Antero Resources have soared 32% month-to-date, following a 9.7% drop in October.

6. Cheniere Energy, Inc.

As the top exporter of liquefied natural gas from the U.S., Cheniere benefits from global demand for natural gas, particularly in Europe.

Cheniere Energy has gained 16% thus far this month.

7. Williams Companies, Inc.

Williams operates natural gas infrastructure and transmission pipelines, playing a vital role in connecting supply to end markets.

Shares are up 13.6% in November, following a 14.7% surge in October.

Chart: US Natural Gas Stocks Rallied In November

Small-cap stocks are stealing the spotlight as we close out 2024, riding high on a perfect storm of political and economic tailwinds. Donald Trump's re-election has sent ripples through the market, with his pro-business agenda sparking a rally that's lifting small companies to new heights.

The Russell 2000 Index (RUT), a key barometer for small-caps, broke out to a new three-year peak following Trump's victory, as investors priced in the president-elect's promises of reduced corporate taxes, favorable tariffs, and deregulation, which are expected to particularly benefit domestically focused small-caps. As we look ahead, many analysts predict these nimble players could continue to outperform, potentially leading the charge into 2025.

Adding fuel to the fire, the Federal Reserve's recent 0.25 percentage point rate cut has further boosted small-cap appeal. This marks the second reduction of 2024, bringing the federal funds rate down to 4.5%-4.75%. With inflation and borrowing costs both easing, small businesses are finding themselves in a sweet spot.

For investors looking to capitalize on this small-cap momentum, let's explore three distinct ETFs that offer a unique approach to playing this dynamic market segment.

#1. Vanguard Small-Cap Growth ETF

The Vanguard Small-Cap Growth ETF has been a standout performer in 2024, capturing the power of small-cap growth potential. Since its inception in January 2004, VBK has grown into a formidable player in the small-cap arena, now boasting an impressive $19.72 billion in assets under management (AUM).

VBK's strategy is both straightforward and sophisticated. It tracks the CRSP US Small Cap Growth Index, employing a full-replication approach to mirror the index's composition. This method ensures the fund captures the entire spectrum of small-cap growth opportunities in the U.S. market.

VBK's portfolio construction focuses on companies demonstrating robust growth characteristics, including strong earnings growth, accelerating sales, high return on assets, and promising investment metrics. This multi-faceted approach allows VBK to identify and invest in small companies with the most significant growth potential across various sectors.

The fund's performance speaks volumes about its strategy's effectiveness. Over the past 52 weeks, VBK is up 35.3%, and the shares have racked up a 20% gain so far in 2024 - outpacing the RUT on both counts.

VBK's top holdings showcase its diverse yet focused approach. Midstream energy stock Targa Resources leads at 1.27%, followed by Taser company Axon Enterprise Inc at 1.02%, footwear firm Deckers Outdoor at 0.95%, software company PTC Inc at 0.80%, and HVAC specialist Lennox International at 0.74%. These companies exemplify the growth characteristics VBK targets, contributing to its robust performance.

Despite its strong returns, VBK remains cost-effective, with a mere 0.07% management fee. It also offers a modest annualized dividend of $1.72 per share, yielding 0.59%—a bonus for a growth-oriented fund. The ETF's popularity is evident in its trading volume, which averages around 300,000 shares, ensuring ample liquidity for traders.

#2. Invesco DWA SmallCap Momentum ETF

The Invesco DWA SmallCap Momentum ETF has been on a tear, showcasing the power of momentum investing in the small-cap space. Since its inception in July 2012, DWAS has carved out a unique niche, focusing on small-cap companies exhibiting strong relative strength characteristics.

At the heart of DWAS's strategy is the Dorsey Wright SmallCap Technical Leaders Index. This isn't your run-of-the-mill index tracking. The fund employs a sophisticated, proprietary methodology developed by Dorsey, Wright & Associates, LLC to identify small-caps with potent market momentum. By allocating at least 90% of its assets to these high-flyers, DWAS aims to capture outsized returns in the dynamic small-cap sector.

This approach has paid off handsomely. DWAS has delivered a standout 33% return over the past 52 weeks, and has gained nearly 19% so far in 2024.

Diving into the portfolio, we find a diverse mix of momentum leaders. Quantum computing startup Rigel Pharmaceuticals tops the list at 2.14%, followed by defense firm Leonardo DRS Inc at 1.79%, industrial name Limbach Holdings at 1.64%, construction company Sterling Infrastructure at 1.57%, and auto parts specialist Modine Manufacturing at 1.55%. These holdings reflect the fund's knack for identifying small caps with significant growth potential across various sectors.

With $1.07 billion in assets under management, DWAS has grown into a substantial player in the small-cap ETF space. With average volumes hovering around 34,000 shares, however, it's not quite as active as VBK on a daily basis, so investors should watch entry prices carefully to control slippage.

DWAS does come with a higher management fee of 0.60%, reflecting the more active nature of its strategy. It also offers a respectable annualized dividend of $1.48 per share, yielding 1.50% - a nice bonus for a momentum-focused fund.

The recent performance of DWAS underscores the potential of its momentum-driven approach. With a 6.4% gain in the past month alone, it's clear that this ETF is capitalizing on the current market dynamics favoring small-cap stocks.

#3. ProShares Ultra Russell 2000 ETF

The ProShares Ultra Russell 2000 is not your average small-cap ETF. Launched in January 2007, this fund takes a bold approach to small-cap investing, aiming to deliver twice the daily performance of the Russell 2000 Index. It's a high-octane play that's best suited for investors with an appetite for leveraged investments, and a higher tolerance for risk.

UWM's strategy is straightforward but potent. Through a combination of swap agreements with major financial institutions and direct investments in Russell 2000 components, the fund seeks to achieve its 2x leverage. This approach has led to some solid returns when the RUT is performing well, with UWM surging 57.4% over the past 52 weeks, and rising 23.3% in 2024 alone.

However, this amplified exposure comes with heightened volatility, and it's important to note that the fund is designed to 2x RUT's returns on a daily basis, and not over longer time frames. UWM's daily trading volumes are hovering around 650,000 shares, and this liquidity is crucial for a fund designed for active trading rather than long-term holding.

With $516 million in AUM, UWM has carved out a significant niche in the leveraged ETF space. The fund's management fee of 0.95% is higher than traditional ETFs, reflecting the complexity of maintaining its leveraged position. Despite its aggressive growth focus, UWM still manages to offer a dividend yield of 0.90%, with an annualized dividend of $0.42 per share.

It's worth noting that UWM doesn't disclose individual stock holdings like traditional ETFs. Instead, its performance is tied directly to the Russell 2000 Index, providing broad exposure to the small-cap market.

UWM's approach is not for the faint of heart. Its leveraged nature means both gains and losses are amplified.

Conclusion

Small-cap stocks are having a moment, and these three ETFs—VBK, DWAS, and UWM—each offer unique ways to tap into their growth potential. Whether you're looking for steady growth with VBK, momentum-driven gains with DWAS, or amplified returns through UWM’s leveraged strategy, there's something here for every risk appetite. As the market outlook continues to shift amid changing policy expectations, these funds provide diverse approaches to capturing the opportunities small-cap stocks present in 2024 and beyond.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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Investors interested in Oils-Energy stocks should always be looking to find the best-performing companies in the group. FMC Technologies (FTI) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Oils-Energy sector should help us answer this question.

FMC Technologies is one of 241 companies in the Oils-Energy group. The Oils-Energy group currently sits at #16 within the Zacks Sector Rank. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks within the groups is measured, and the sectors are listed from best to worst.

The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. FMC Technologies is currently sporting a Zacks Rank of #2 (Buy).

The Zacks Consensus Estimate for FTI's full-year earnings has moved 14.4% higher within the past quarter. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

According to our latest data, FTI has moved about 44% on a year-to-date basis. At the same time, Oils-Energy stocks have gained an average of 10.1%. As we can see, FMC Technologies is performing better than its sector in the calendar year.

Another Oils-Energy stock, which has outperformed the sector so far this year, is Targa Resources, Inc. (TRGP). The stock has returned 133.5% year-to-date.

For Targa Resources, Inc. the consensus EPS estimate for the current year has increased 6% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

Looking more specifically, FMC Technologies belongs to the Oil and Gas - Field Services industry, a group that includes 23 individual stocks and currently sits at #77 in the Zacks Industry Rank. Stocks in this group have gained about 1.1% so far this year, so FTI is performing better this group in terms of year-to-date returns.

In contrast, Targa Resources, Inc. falls under the Oil and Gas - Refining and Marketing - Master Limited Partnerships industry. Currently, this industry has 6 stocks and is ranked #223. Since the beginning of the year, the industry has moved +64.7%.

Going forward, investors interested in Oils-Energy stocks should continue to pay close attention to FMC Technologies and Targa Resources, Inc. as they could maintain their solid performance.

Zacks Investment Research