Best Performing Stocks of the Top US ETF of September
Rising energy prices are benefiting the energy companies, including natural gas.
First Trust ISE-Revere Natural Gas Index Fund FCG topped the list of best-performing ETFs in September, gaining 21.6%.
The rally was driven by rising energy prices that are benefiting the energy companies, including natural gas. Natural gas prices spiked to a seven-year high buoyed by the growing concerns over tight winter supplies as well as the expiration of October options. Traders were closing out bearish positions ahead of the expiration of October options and futures this week.
Per one source, the weather is expected to remain warmer than average throughout most of the United States during the next two weeks. Warm weather will spur cooling demand in homes and businesses, bolstering natural gas prices. Energy demand is also rising as global economies are improving on the broader reach of vaccinations and massive stimulus (read: ETFs to Tap on Soaring Natural Gas Price).
Additionally, soaring global gas prices are prompting buyers worldwide to continue purchasing all the liquefied natural gas that the United States is producing. An increase in LNG export demand will likely continue, given the higher demand in Asia and Europe.
A rebound in natural gas consumption around the world has also added to the strength. Demand is expected to rise further this year if governments do not implement strong policies to move the world onto a path toward net-zero emissions by mid-century, according to a new report by the International Energy Agency. The agency expects global gas demand to rise 3.6% in 2021 before easing to an average growth rate of 1.7% over the following three years. By 2024, demand is forecast to be up 7% from 2019’s pre-COVID-19 levels.
Citigroup believes that global natural gas prices may continue to rise in the coming months, citing strong demand and tightening supply market conditions. Any sudden increase in demand or a supply disruption may push prices further upward.
Let’s take a closer look at the fundamentals of FCG.
FCG in Focus
This fund offers exposure to U.S. companies involved in the exploration and production of natural gas. It follows the ISE-REVERE Natural Gas Index and holds 40 stocks in its basket. The fund has amassed $312.9 million in its asset base while charging 60 bps in annual fees. Volume is solid with 1.3 million shares exchanged per day on average. The product has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 5 Top-Ranked ETFs That Outperformed the Market in September).
Though most of the stocks in the fund’s portfolio delivered strong returns, a few were up more than 20% in September. Below we have highlighted the five best-performing stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of FCG
Comstock Resources Inc. CRK: This independent oil and gas exploration and production company is engaged in the acquisition, exploration and development of oil and gas properties. It has an estimated earnings growth rate of 378.3% for this year. The stock makes up for 0.75% share in the FCG basket and has soared 70.6% in a month. It carries a Zacks Rank #2 and a VGM Score of A.
Laredo Petroleum Inc. LPI: This company is engaged in the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States. It jumped 62.5% in a month and accounts for a 1.8% share in the ETF. Laredo Petroleum has an estimated earnings growth rate of 7.5% for this year. It currently has a Zacks Rank #3 (Hold) and Value Score of B (read: Energy ETFs: A Bright Spot Amid Volatility).
Range Resources Corporation RRC: This independent oil and gas company is engaged in the exploration, development and acquisition of oil and gas properties, primarily in the Appalachian Basin and North Louisiana. The stock has rallied 47.4% in a month and makes up for 3.6% in FCG portfolio. Its earnings per share are expected to be $1.71 this year versus a loss of 9 cents last year. Range Resources has a Zacks Rank #1 and a Momentum Score of A.
Callon Petroleum Company CPE: This company is solely focused on exploration, and production of oil and gas resources in the Permian Basin. The stock has gained 38.3% in a month and has an estimated earnings growth rate of 171% for this year. It currently carries a Zacks Rank #3 and has a VGM Score of B. Callon Petroleum accounts for 2.4% allocation.
Vermilion Energy Inc. VET: It is an international oil and gas producer with properties in Western Canada, Australia, France and the Netherlands. The stock delivered returns of 37.5% in a month and has an estimated earnings growth rate of 173.6% for this year. The stock has a Zacks Rank #3 and a Value Score of A. Vermilion Energy makes up 0.9% of FCG.
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First Trust Natural Gas ETF (FCG): ETF Research Reports
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