Spotlight Shines on Natural Gas, As Japan's Nuclear Fallout Continues

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Includes: CHK, DVN, EOG
by: David Fessler

As I write, nuclear stocks and solar stocks are like two magnets repelling each other.

In addition to obvious nuclear plays like uranium miner Cameco Corporation (NYSE: CCJ) and nuclear reactor maker, General Electric (NYSE: GE), just about anyone remotely associated with the nuclear industry is taking a big hit.

Solar stocks are doing just the opposite. Companies like JA Solar Holdings (Nasdaq: JASO) and First Solar, Inc. (Nasdaq: FSLR) are both on the upswing for a second straight day.

So is it time to jump into solar?

The short answer is “yes” and “no” …

Snub Solar and Buy This Commodity Instead

The trouble is, solar energy is still relatively expensive. And while falling solar panel prices will make solar competitive with conventional fossil fuels over the long term, the industry has a long way to go before that happens.

There’s a much better immediate option for investors in energy stocks – natural gas companies.

As I was watching CNN’s coverage of the Japan disaster last night, I couldn’t help but notice a lot of commercials for the American Natural Gas Association.

It makes sense. The current nuclear crisis has focused attention on “clean-burning” natural gas.

As the ads started, “Brought to you by America’s Natural Gas: the smarter power today,” the pitch ended with, “We’re cleaner, American, abundant and ready now.”

And in light of recent events, what’s not to like?

Natural Gas: Cleaner, Safer, Abundant… And On Sale

It’s a true shame that it takes the threat of a nuclear meltdown to get America’s attention on this valuable resource sitting a mile below my chair. But the fact that we’re not making better use of this abundant resource is mind-boggling.

Yes, it might warm the Earth’s atmosphere a little bit, but it doesn’t pose the same threat to humans as nuclear, nor leave thousands of square miles of radioactive landscape. In addition, there’s no messy spent fuel that has to be stored for 10,000 years or so.

However, as the Japan fallout continues, natural gas stocks like Chesapeake Energy Corporation (NYSE: CHK), Devon Energy Corporation (NYSE: DVN), EOG Resources (NYSE: EOG) are being dragged down along with the broader market.

But the bottom line is this: Natural gas stocks are on sale and represent a great buying opportunity for investors with the guts to make the call. Natural gas demand will only increase from here – especially now that nuclear power has yet another black eye in the making.

In addition, liquefied natural gas exports from the United States will begin to ramp up over the next five years, which will reduce our trade deficit significantly.

But don’t wait too long to make your move here. Once Japan’s nuclear nightmare subsides, energy stocks will be on a tear once again.

Disclosure: None