Southwestern Energy vs. Tellurian: Which Natural Gas Stock Is a Better Buy?

NYSE: SWN | Southwestern Energy Co. News, Ratings, and Charts

SWN – Natural gas stocks, such as Southwestern Energy (SWN) and Tellurian (TELL), have been on an absolute tear in the last 12-months due to rising commodity prices and geopolitical tensions. Let’s see which of the two stocks should be part of your portfolio in 2022.

Since the start of 2022, most equity indices are trading significantly lower from all-time highs. At the time of writing, the S&P 500 index is down 10% while the tech-heavy Nasdaq Composite index has entered bear-market territory, which constitutes a fall of more than 20% from record levels.

However, the energy sector has crushed the broader indices in 2022, due to higher commodity prices arising from the ongoing war between Ukraine and Russia as well as higher demand, all around the world. The Energy Select Sector SPDR Fund (XLE) is up 52% in the last year and has gained 33% in 2022.

As energy prices are likely to remain elevated this year, let’s see if you need to add natural gas stocks such as Southwestern Energy (SWN - Get Rating) and Tellurian (TELL - Get Rating) to your portfolio right now.

Southwestern Energy

Valued at $8 billion by market cap, Southwestern Energy is an energy company that is engaged in the exploration, development, and production of natural gas, natural gas liquids, and oil in the U.S.

Southwestern Energy is focused on the development of natural gas reservoirs in Ohio, Louisiana, Pennsylvania, and West Virginia. Its E&P business reported an operating income of $2.58 billion in 2021, compared to a loss of $2.96 billion in the year-ago period. Further, the business generated an operating cash flow of $1.71 billion in 2021, compared to $372 million in 2020.

Shares of Southwestern Energy have increased by 55% in 2022 and are up close to 80% in the last 12-months. Due to higher oil prices, investors expect Southwestern Energy’s adjusted earnings to rise at an annual rate of 13% in the next five years.

Despite its stellar gains, Southwestern Energy stock is valued at a forward price to earnings multiple of 5.4x which is quite reasonable.

Tellurian

Shares of Tellurian have more than doubled since April 2021 and are up 60% year-to-date, valuing the company at $2.54 by market cap. Tellurian is engaged in the natural gas business and has developed a portfolio of natural gas production, liquefied natural gas marketing as well as infrastructure assets including an LNG export facility of 27.6 million tons per annum.

Tellurian has built a pipeline to support the addition of the LNG export facility and aims to become the market leader for LNG exports in the U.S. It believes countries such as China, India, and other regions in Southeast Asia will drive LNG demand higher in the upcoming decade.

Investors need to understand that Tellurian is still in the process of building a robust LNG infrastructure and will need to raise capital multiple times in the future, resulting in shareholder dilution and volatility in stock prices.

The verdict

The global demand for energy is expected to drive prices higher in 2022 and beyond. In fact, the U.S. Energy Information Administration expects energy demand to rise by 47% in the next three decades, making both Southwestern Energy and Tellurian solid bets.

However, I believe the risks associated with investing in Tellurian right now are much higher due to the uncertainties surrounding the company. Tellurian will need to build a wide network of pipelines which in turn will generate future cash flows. Alternatively, Southwestern Energy’s predictable earnings and attractive valuation make it a top buy in an inflationary environment.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


SWN shares fell $7.23 (-100.00%) in premarket trading Wednesday. Year-to-date, SWN has gained 57.51%, versus a -11.77% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditya Raghunath


Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SWNGet RatingGet RatingGet Rating
TELLGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors Remain “Cautiously Optimistic”

The S&P 500 (SPY) has made great advances since the lows of early April. Yet seem to be stuck under resistance at 6,000. What happens next depends on tariff talks. So let’s talk about the latest news on that front.

Bull Market Til Proven Otherwise

The phrase that paid for investors in 2025 was “Bull market til proven otherwise” Steve Reitmeister explains why in his latest market update and preview of top stock picks.

Investor Alert: Mission Accomplished?

The S&P 500 (SPY) has broken out above the 200 day moving average. Does that mean that bear market fears are now over? And should investors be riding the bull to new heights? Read on for Steve Reitmeister’s answer...

Stock Market Update: It’s Complicated!

The S&P 500 (SPY) may have bounced 17% from recent lows, but the outlook for stocks from here is...in a word...COMPLICATED. Read on to get Steve Reitmeister full market outlook and trading plan for this complicated market environment.

Becoming More Bullish on Stocks, But...

Stocks are on a roll with the S&P 500 (SPY) up more than 10% from the recent lows. Before you start getting too giddy, you should read this updated market outlook and trading plan Steve Reitmeister.

Read More Stories

More Southwestern Energy Co. (SWN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SWN News