Today, we are inundated with news of inflation and recession fears. While these are real problems that will bring down many businesses, there is more to the story.
As Mad Money host Jim Cramer says, “There’s always a bull market somewhere.”
Even if you decide to stay away from certain stocks, you may find opportunities in others. Here are two bull market industries and stocks that are experiencing strong growth tailwinds.
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The natural gas industry is firing on all cylinders
Natural gas is currently trading at nearly $10, more than 200% higher than last year.
This is easily explained, as there are strong forces of supply and demand at work. On the demand side, the growing LNG industry has opened up the North American natural gas sector to strong global demand. According to the Energy Information Association, LNG exports are up nearly 20% this year.
On the supply side, North American natural gas is the cleanest, cheapest, most abundant and most reliable. However, North American infrastructure constraints have put pressure on supply, driving up prices.
In addition, the supply of natural gas from other countries is completely unreliable, which also drives up prices.
Chesapeake Energy Corp. (CHK)
This $13 billion oil and gas producer has assets in prolific basins like Haynesville, in eastern Texas and western Louisiana, and the Marcellus Basin, which stretches from upstate New York to Pennsylvania, Virginia. Western and Ohio.
Natural gas accounts for 85% of Chesapeake’s production, a very positive thing given the current bullish state of the natural gas industry.
In addition, the company has a privileged position near the Gulf Coast, where many LNG terminals are located. In fact, more than 2 billion cubic feet of natural gas from Chesapeake is immediately adjacent to LNG terminals on the Gulf Coast.
This translates to a bright future as the company is working to secure contracts for its gas at these LNG terminals. This will provide access to higher LNG prices as well as greater diversification.
Like most natural gas producers today, Chesapeake is generating huge amounts of cash flow: Management expects to generate more than $9 billion in cash flow over the next five years. In its most recent quarter, it generated $532 million in adjusted free cash flow, more than 50% more than last year and the highest quarterly amount in its history.
Much of this cash flow will be returned to shareholders through dividends and share buybacks, both of which are catalysts for stocks to rise.
Digitization trend takes IT consultancies higher
As the benefits of digitization become increasingly clear, this trend is fueling a bull market in the world of technology.
The banking industry, among other industries, is in a hurry to go digital. Hampered by outdated technology platforms, banks are seeing the writing on the wall. Digitization is necessary to remain competitive. And the banks are involved.
For example, Citigroup Inc. is embarking on an “aggressive growth strategy.” As Jonathon Lofthouse, head of enterprise venture technology and markets, puts it, “Companies that can go digital faster will create a competitive advantage.”
CGI Inc. (GIB)
This Canadian information technology services consulting firm has established itself as a leading player with a strong global presence.
CGI has grown from a start-up in 1976 to a $17 billion company today.
Within this space, demand from financial institutions is strong and growing rapidly. CGI’s latest quarter showed strong growth in most areas, with banking standing out once again.
The company posted strong revenue growth, accompanied by a 14% increase in earnings per share.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.