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Natural Gas Stocks: Better Than Oil

Oil prices keep slipping -- but Michael Hall says natural gas looks strong as ever.

Hall, the vice president of Oil & Gas Equity Research at Stifel Nicolaus, offered CNBC his insights -- and his top natgas stock picks.

He believes the market is oversold, due to investors misunderstanding the historical trend cycles -- and gas' relationship to oil.

"We have a strong seasonal outlook," he said. "Nine out of the last 10 years, we've seen prices climb" through autumn to December. He says the winter heating season should put a nice floor under natural gas prices.

Recommendations:

"We like larger cap, more liquid names," said Hall.

- Chesapeake Energy -- "the U.S.' leading natural gas supplier"

- Cabot Oil & Gas

- Petrohawk

- XTO -- After the firm's 2008 acquisitions "and the underperformance that's typical of such acquisitions," Hall expects a big XTO rebound.

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Disclosures:

Stifel Nicholas expects to receive or intends to seek compensation for investment banking services from all of the companies mentioned above, in the next three months.

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