Bernstein Names 5 Stocks to Watch as European Gas Storage Hits Historic Lows

Analysts at Bernstein have highlighted five European stocks poised to benefit from an increasingly tight natural gas market, as storage levels head into the 2026/27 heating season at historically low levels.

Europe's Gas Market Under Pressure

According to a note from the brokerage, European gas storage has fallen to just 67% of capacity, a significant drop from 80% a year ago and 93% in 2024. Bernstein attributes the squeeze to several factors, including disruptions to liquefied natural gas (LNG) flows through the Strait of Hormuz, increased competition for cargoes from Asian buyers, and an inverted gas price curve that reduces the financial incentive to store gas for future use.

Bernstein's analysts stated that under every scenario they modeled, the market is expected to remain tight. This backdrop of supply constraint and potential price volatility informs their selection of companies best positioned to navigate the environment.

Analyst's 'Outperform' Rated Picks

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Bernstein identified five companies, all with "Outperform" ratings, that stand to gain from the market dynamics. The selections span utilities and engineering firms with direct or indirect exposure to gas and power prices, as well as the long-term build-out of LNG infrastructure.

The key stocks flagged by the firm include:

• SSE (SSE.L): The UK-listed utility is Bernstein's top pick in the sector, with a price target of 2,850p implying nearly 30% upside. The firm is positioned to benefit from power-price volatility through its thermal generation assets and flexible gas trading operations. It trades at 13.1 times its estimated 2027 earnings.
• GTT (GTT.PA): Described as the purest play on Europe's structural shift to LNG, the French engineering group designs critical containment systems for LNG carriers. Bernstein sees the supply crunch reinforcing investment in LNG shipping, directly benefiting GTT's order book. The firm has a €245 price target on the stock.
• Saipem (SPMI.MI): The Italian engineering and construction firm offers the most significant potential upside, with a €4.96 price target that is over 71% above its current price. Its global involvement in LNG liquefaction and export infrastructure projects gives it direct exposure to capital spending driven by Europe's need for non-Russian gas.
• Technip Energies (TE.PA): Similar to Saipem, this firm is a key player in building LNG liquefaction capacity worldwide. Bernstein argues that Europe's growing import needs strengthen the investment case for new LNG infrastructure. With a €47 price target, implying over 40% upside, its recent underperformance makes it a more contrarian choice.
• EDP (EDP.LS): The Portuguese utility is considered a more conditional play. It stands to benefit from its unhedged power generation and exposure to Iberian electricity prices, but only if its hydropower output remains strong. The firm has a €5.40 price target on the stock, with its dividend providing potential support.