Hello, Reader.

Life can be filled with anomalies.

A white puppy is born into a litter of brown siblings. Snowfall blankets the Florida Panhandle. That one Monday when Garfield was happy.

Anomalies happen in the stock market, too.

As it happens, a short-term anomaly has developed in the natural gas market: Gas prices are rising, but natural gas stocks are falling. The chart below tells the tale.

Tumbling crude oil prices probably deserve most of the blame for causing this rare divergence.

For starters, falling crude prices cast a pall over the entire fossil fuel sector. In addition, most major natural gas producers also produce significant volumes of crude oil.

As a result, the shares of almost every North American natural gas producer have been sliding lower, no matter how little crude each company produces.

The First Trust Natural Gas ETF (FCG) is a perfect case-in-point. Its price has gone nowhere during the last two months, even though the natural gas price has jumped around 35% over that brief time frame.

Sooner or later, natural gas stocks should begin to reflect the strong pricing in the natural gas market and the bullish trends underway there. U.S. natural gas in storage, relative to seasonal three-year average levels, has been dropping sharply for nearly a year.

The most recent reading showed storage levels 14% below average levels for this time of year.

Against this backdrop, U.S. natural gas demand is on track to surpass supply by a wide margin over the next two years, which should reduce stockpiles even further below three-year average levels.

Our nation’s rapidly growing LNG (liquified natural gas) export capacity will account for most of the demand growth. The U.S. became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar.

In February, the amount of gas flowing to the eight big U.S. LNG export plants rose to a record-high 15.6 Bcf/d (billion cubic feet per day), as new units at Venture Global’s 3.2-Bcf/d Plaquemines LNG export plant in Louisiana entered service.

So far this month, LNG export volumes are even higher.

Looking down the road, the U.S. Energy Information Administration (EIA) predicts LNG exports will grow by 2.1 Bcf/d and an additional 2.1 Bcf/d in 2026, due to new export facilities that will begin operating during that time frame. Assuming this LNG demand materializes as the EIA expects, it would account for a whopping 72% of the entire country’s expected demand growth in 2025 and 2026.

Unlike domestic demand spikes that occur during exceptionally cold winters or hot summers, LNG export demand is relatively constant. Once in place, it remains in place and continues to consume domestic gas supplies, no matter what national weather conditions might be.

As such, this source of demand puts continuous upward pressure on natural gas prices, especially if domestic gas production fails to keep pace.

The EIA is predicting that exact scenario. Although the agency expects domestic production to increase by 3.6% during the next two years, that figure is well below the 5.8% demand growth the agency predicts.

This widening supply-demand imbalance would reduce U.S. gas inventories, which would be unequivocally bullish for natural gas prices.

My newest Fry’s Investment Report play on natural gas is already reaping rewards from improving natural gas prices in the Permian Basin of West Texas… although the company’s still-depressed share price does not reflect that potential.

At less than eight times earnings, its share price seems substantially undervalued, relative to both its peer group and to its “hidden” earnings potential from its holdings in the Delaware Basin chunk of the Permian.

But all that means is that this company currently offers a great buying opportunity.

Bottom line: U.S. natural gas is “Buy,” which means this natural gas play is a “Strong Buy.”

For more, click here to learn more about becoming a Fry’s Investment Report member today.

Now, let’s look at what we covered here at Smart Money this past week…

Smart Money Roundup

This ‘AI Divide’ Creates a Once-In-a-Generation Opportunity – Which Side Will You Land On?

The tech world is splitting in two due to AI, creating stark contrasts between those who adapt and those left behind. While execs pop Champagne as AI turbocharges stocks and mints new fortunes, others watch their careers vaporize overnight. Read on as Luke Lango digs deeper into how exactly artificial intelligence is widening the gulf between the haves and the have nots.

The Biggest Wealth Shift of Our Lives Is Coming – Here’s How to Prepare

As AI transforms industries, a stark divide emerges between adaptive and stagnant companies. Drawing parallels to past technological disruptions, businesses are leveraging AI to dramatically reduce workforce while increasing efficiency. Louis Navellier is here to share why this shift is happening, and how to prepare for it.

The 5-Letter Word Every Investor Should Memorize to Win in 2025

Investors are feeling frustrated, with bearish sentiment shooting up and many tech stocks taking a beating. But the broader stock market paints a different picture: A quiet shift is happening as forgotten value stocks start to steal the spotlight. Tom Yeung explains why market uncertainty is reshaping investment strategies.

Bill Gates Says You Might Be Obsolete Soon – Here’s What to Do About It

Spring cleaning forces us to confront obsolete tech – those dusty drawers filled with ancient phone chargers and forgotten gadgets. Bill Gates warns us humans might join this obsolete list, predicting AI will soon handle things like medical advice and tutoring without us. In this issue, I’ll take a look at the rise of physical AI and how one company is leading the charge.

5 Ways to Prepare for AI’s ‘Tower of Terror’ Moment

The stock market currently resembles Disney’s Tower of Terror ride – a seemingly endless plummet that’s actually shorter than it feels. Recent market volatility, triggered by tariff tensons, has investors experiencing stomach-dropping fear despite limited actual losses. Learn more about the five steps Louis Navellier wants you to take to protect your portfolio.

Looking Ahead

While I have my eye on the natural gas market, I am also keeping my focus on the biggest trend of our time: artificial intelligence.

AI has been the biggest wealth driver in the stock market over the last two years, minting over 500,000 new millionaires.

But for all its promise, AI also has a dark side – one that could shock the financial system. 

My InvestorPlace colleagues Louis Navellier and Luke Lango and I have been talking a lot about the “Technochasm,” a phenomenon I’ve been tracking for the past five years. It refers to the deep divide that technology is creating within the market and society.

On one side of the gap are the companies (and investors) who leverage rapid technological innovation. On the other: investors and businesses that get caught off guard and fall behind.

Well, AI has come along and lit a match under the Technochasm. And this divide is now nearing the point of being uncrossable.

That is why I recently held an important broadcast with Louis and Luke to explain exactly how this massive capital shift will create the next generation of tech millionaires – and leave millions of others behind.

If you want to learn more about this opportunity – and the six stocks at the center of it – click here to access the free replay.

Regards,

Eric Fry