Increased demand for natural gas driven by AI revolution benefits Archrock and Targa Resources.

From Nasdaq: 2024-10-11 03:32:00

The AI revolution is driving an increase in data center energy demand to 11-12% by 2030. Business leaders are turning to nuclear energy, with Microsoft restarting operations at Three-Mile Island. Natural gas provides a more immediate solution, with Archrock and Targa Resources poised to benefit as top-ranked stocks in the industry.

Archrock is a natural gas compression services company critical for maintaining pressure in pipelines. With a Zacks Rank #1, the stock is undervalued with a forward earnings multiple of 19.8x. Archrock pays a 3.1% dividend and has seen upward trending earnings revisions, making it a compelling investment at this time.

Targa Resources leads the midstream services sector in North America, supporting the movement of natural gas and NGLs. The company benefits from its strategic position in high-energy-producing regions and is expected to see a 61.2% YoY growth in FY24 earnings. With a Zacks Rank #1 rating, Targa Resources offers both growth potential and a dividend yield of 1.8%.

Both Archrock and Targa Resources are primed to capitalize on the increased demand for natural gas in the AI revolution. Investors can choose between Archrock for a value-oriented play with steady income and Targa Resources for a growth narrative backed by its pivotal role in the midstream sector. This makes both stocks appealing options for investors looking to benefit from the surge in natural gas usage.



Read more at Nasdaq: Zacks Investment Ideas feature highlights: Microsoft, Archrock and Targa Resources