Electricity demand is likely to remain strong, supported by rapidly expanding data centers and growing air-conditioning needs. In the United States, the world’s largest economy, natural gas continues to remain in the spotlight as a key source of power generation.
In this context, let’s take a closer look at two energy players — large-cap Kinder Morgan KMI and small-cap Natural Gas Services Group, Inc. NGS — to see whether they offer compelling value.
Natural Gas Dominates U.S. Electricity Generation
Natural gas is a relatively cleaner source of fuel, given its lower emissions of pollutants. Among all the energy sources, natural gas was responsible for 40% of electricity generation in the United States in 2025, per data from the U.S. Energy Information Administration (EIA). In 2026, the proportion will also be 40%, as mentioned in EIA’s latest short-term energy outlook.
By comparison, for this year, the contributions of coal, nuclear, and conventional hydropower are likely to be much lower at 16%, 18%, and 6%, respectively, per EIA’s predictions. Thus, for electricity generation, the United States is still largely dependent on natural gas. Hence, it would be ideal for investors to allocate money toward energy companies that are tied to businesses related to natural gas transportation, compression and production.
2 Stocks in the Spotlight: KMI, NGS
Being a leading midstream energy company, Kinder Morgan is well-positioned to benefit from the increasing demand for natural gas both in the United States and worldwide. KMI’s assets comprise the largest transportation network of natural gas in the United States and are responsible for transporting roughly 40% of all the gas produced in the domestic market.
KMI, on its first-quarter 2026 earnings call, expressed expectations that U.S. natural gas demand would surge, driven by rising electricity demand from data centers. Kinder Morgan, currently carrying a Zacks Rank #2 (Buy), expects the demand to jump 27% to 150 billion cubic feet per day by 2031 from this year's level. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growing natural gas consumption for U.S. electricity generation could lead to higher production and greater transportation of gas through energy infrastructure. This should support #2 Ranked Natural Gas Services, as its compression equipment helps gas flow through the system, while the company has also pointed to rising production and midstream expansion as drivers of stronger compression demand.
NGS appears well placed to benefit from this trend. Its fleet is already seeing high utilization and record rental revenue, and the company continues to add large-horsepower units backed by long-term contracts. The Flatrock acquisition further expands its compression capacity and improves its presence in major producing regions, including the Permian and Eagle Ford.
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Kinder Morgan, Inc. (KMI): Free Stock Analysis Report
Natural Gas Services Group, Inc. (NGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).