There’s one acronym that my journalism professor would repeat almost daily…
She’d hit us with: “That’s giving me severe MEGO syndrome,” or, “That’s a MEGO sentence.”
It stands for “my eyes glaze over,” aka “find a better way to say that.”
While this subtle dig stung on more than one occasion, it was also formative in my writing and editing career.
I bring this up today because I want to talk about natural gas.
Yep! That boring resource that heats our homes and dries our clothes.
Unless you’re a commodities trader (and maybe even if you are), this market segment has a severe case of MEGO. We aren’t talking about innovative tech stocks…
But after digging through Mike Carr’s Apex Profit Calendar research, it’s going to pay to keep those eyes open and on this lucrative upcoming profit season.
Why Natural Gas?
We’ve hit on seasonality and outperformance throughout this week in Money & Markets Daily, but you may still be wondering: What the heck is a profit season?
Put simply, a profit season is the time frame when a specific sector hits its most significant period of outperformance. And Mike has established — using 10 years of data in his backtest — that 15 market subsectors have the strongest profit seasons over a year.
Consumer discretionary stocks tend to outperform in the summer months as companies stock up and plan for the busy holiday season… Homebuilders spike in spring as the real estate market really starts to kick off in the summer.
What about natural gas? You may think that we’re already beyond any profitable season as temperatures creep higher. But Mike clued me in on what might be going on:
Demand for natural gas increases at this time of year because suppliers are refilling storage tanks. Demand rises in the winter months as gas is used for heating. This leads to a drawdown in supplier inventories. They take steps to replenish supply as winter draws to a close, and that could be why we see a bullish trend in the sector.
And here’s the thing…
When looking at the 15 subsectors Mike identified, natural gas was the best performer, with an average 25% gain over the 10-year backtest. And that’s over a trading period of just 53 days.
The sector may give you MEGO syndrome, but you’d take it with consistent gains like that.
Tech-like Growth in the Appalachian Basin
With that as a backdrop, I wanted to see what Green Zone Power Ratings had to say about a natural gas stock. Let’s go with EQT Corp. (NYSE: EQT).
EQT is the largest natural gas producer in the U.S. It has operations in the Appalachian Basin in Pennsylvania, Adam’s home state of West Virginia and Ohio.
But does the largest producer translate into top natural gas stock?
Here’s what Green Zone Power Ratings says…
EQT’s Green Zone Power Ratings in February 2024.
EQT rates a “Bullish” 69 out of 100 in Adam O’Dell’s proprietary system. That means it’s expected to outperform the broader S&P 500 by 2X over the next 12 months.
Like many other energy-related stocks, EQT boasts a 92 rating on Value. As Adam has mentioned over the years, investors left energy behind in search of tech growth. And that means that many energy stocks are trading at dirt-cheap valuations.
These are different industries, I know, but EQT trades at a price-to-earnings ratio of 8 compared to NVIDIA’s P/E of 97! Yes, you can’t ignore investing in the AI mega trend, but know that it comes with a hefty price tag.
What’s even better is that EQT’s Growth rating is strong at 89. That means the business is generating revenue at a solid clip. For the fourth quarter of 2023, EQT’s $1.55 billion in revenue year over year beat estimates by 26%.
So that’s strong growth trading at reasonable valuations, which is why EQT is set to outperform, according to Green Zone Power Ratings.
That’s great, but Mike has a different approach to natural gas stocks…
The Natural Gas Profit Season Is Kicking Off
I love Green Zone Power Ratings because, within moments, I landed on a solid stock in a sector that wasn’t anywhere on my radar.
And what Mike is doing with the system is simply incredible. He’s using it to find the absolute best stocks as each of these 15 profit seasons kicks off throughout a given year.
His subscribers have had a chance to lock in gains on five straight trades since launching in October 2023. He’s batting 1.000 targeting these profit seasons, and natural gas is next…
Later today, Mike is sending out his next recommendation for Apex Alert. It will be a natural gas stock, but I can’t say any more here out of respect for his dedicated subscribers.
Based on the backtest that showed a 25% average gain for these stocks over 10 years, I’d say now is the perfect time to join up and follow Mike. MEGO syndrome, be darned!
Click here to see how to do that before we close the doors later today.
Until next time,
Chad Stone
Managing Editor, Money & Markets