Top Picks 2017: CONSOL Energy

01/25/2017 6:00 am EST

Focus: STOCKS

Robert Rapier

Editor, Investing Daily

Oil and fuel inventories in developed countries have been declining now for five months, suggesting that global demand might already exceed supply, notes Robert Rapier, editor of Investing Daily's Energy Strategist.

The U.S. oil patch caught another big break with Donald Trump’s election; he’s filled several key cabinet posts with huge boosters of fossil fuels.

EQT Corp. (EQT) was my Top Pick last year, EQT Corp. (EQT); it rose 50% by mid-year, before pulling back and ending the year with a 26% gain.  It remains a solid pick for 2017, and is one of my personal holdings.

EQT’s gain in 2016 was respectable, but as a natural gas producer it is still priced at a significant discount considering natural gas prices are nearly 50% higher than a year ago. 

But my Top Pick for growth investors in 2017 is CONSOL Energy (CNX). CONSOL is a natural gas and coal producer with financially savvy, shareholder-friendly management focused on long-term value creation.

CONSOL’s recent separation of a drilling joint venture with Noble Energy (NBL) provided a significant production boost.

In addition, it provided an immediate cash payoff in exchange for ending suspended cost-sharing arrangements that would not have paid off at all without a sustained period of significantly higher prices.

CONSOL plans to eventually divest its interest in an affiliated coal-mining MLP, becoming a pure play natural-gas growth play in the core of the Marcellus and Utica shales.

Yet it is still being priced more like a coal producer. That is a disconnect that makes CONSOL my top growth pick for 2017.

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