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Show mm " mimm NATURAL GAS STOCKS STILL APPEALING After strong investment buying interest in-terest gave a good lift to natural gas stocks in the initial weeks of the current year, this segment of the stock market lapsed into a period of lukewarm performance, Recently, however, this stock group has regained appeal among investors as a result of the armed conflict in the Mideast. Before Iraq's invasion of Iran, the international oil market was experiencing ex-periencing one of the rare periods of surplus supplies occurring in late years, and it was generally conceded that the glut would persist for several additional months. But the picture changed suddenly when expanding military action between bet-ween Iraq and Iran resulted in damage to the oil producing, refining, and shipping facilities of both countries, and it will undoubtedly require a significant span of time after fighting ceases for restoration work to be accomplished. ac-complished. While there are still adequate supplies of oil, the earlier references to the oil glut have pretty much disappeared. NATURAL GAS SUPPLIES AMPLE Naturally, such an abrupt shift in the supply-demand status in petroleum was bound to have ramifications. In this country, the immediate effect was to create uneasiness that the surplus in natural gas supplies might give way to some tightening in availability sooner than had seemed probable only a few weeks ago. -The fear was that any tightening of oil supplies would necessitate greater reliance upon natural gas. At the moment, however, the U.S. is fortunately for-tunately blessed with an ample supply of natural gas to take care of the 1980-81 heating season, which is about to commence. Furthermore, the country's natural gas pipeline systems and distribution networks have had their delivery capabilities boosted, and there is greater storage capacity to draw upon during peak demand periods of the approaching winter. There could, of course, still be spot shortages during protracted spells of intense cold weather, particularly in regions which have been adversely affected by the prolonged stoppage in LNG (liquefied natural gas) shipments from Algeria. '"'Although a temporary-resumption of shipments was recently announced by Algeria, it will be many weeks before the first load arrives. Therefore, this supplemental supply of gas will not start to become available until late in the fall season. EARNINGS OUTLOOK FAVORABLE By and large, natural gas firms have enjoyed good earnings results compared com-pared with a year ago. This favorable showing should mark the profits of a majority of the natural gas firms for full-year 1980, despite recessionary conditions. Looking farther ahead, the Research Department of Babsons Reports remains optimistic with regard to the industry's 1981 operating results. Companies having representation in oil and gas production are already benefiting from rising prices and-or increased output volume, and they should continue to enjoy these rewards for some time to come. INVESTMENT PERSPECTIVE Babson's Research Staff has consistently con-sistently been favorably inclined toward natural gas stocks in general, and this perspective has not changed. In terms of their stronger operating and financial conditions, stocks in this segment of the stock market are still representative of good values, and they are reasonably priced with respect to current and prospective earnings, dividend payments and their coverage, and price-earnings ratios. What with our energy problem destined to persist for an indeterminate length of time, investors are advised to maintain their positions in the leading natural gas issues. At the present time, Babson's looks with favor on a number of stocks in this important group, including in-cluding El Paso Company, Panhandle Eastern Pipe Line, and Tenneco. |