The Cold Snap Lit a Fire Under Natural Gas—3 Trades to Watch

Key Points

• Natural gas stocks are gaining momentum as winter storms, data center demand, and tight U.S. supply push prices higher.
• UNG and BOIL offer tactical ways for traders to capitalize on short-term natural gas volatility during extreme weather.
• Generac provides indirect exposure to cold-weather demand as power outages increase interest in backup generation.

Late January brought snow, ice, and single-digit to sub-zero temperatures throughout much of the United States. In advance of that, several energy stocks rallied hard, particularly those tied to natural gas.

But here’s the part of the story that may get interesting for traders looking to get involved with natural gas stocks. The output of natural gas in the United States sits at decade lows while demand (even without the recent storms) continues to rise.

One reason is data centers. While there is optimism that nuclear energy may be the solution of the future, natural gas is the right now solution. That’s why aggressive traders are looking to capitalize by investing in two ETFs that are best used as tactical tools.

But that’s not the only way to warm your portfolio during this frigid weather. Winter storms can produce power outages, which generates interest in a name that frequently makes its name during hurricane season.

And the best part for investors is that each of these stocks may have further upside. Investors looking to trade this cold snap may want to look at these three options.

UNG Offers Direct Exposure to Short-Term Natural Gas Moves

The United States Natural Gas Fund NYSEARCA: UNG offers traders direct exposure to movements in the spot price of natural gas through near-dated futures contracts. With U.S. production sitting near decade lows and demand rising from power generation and data centers, United States Natural Gas has become a way for nimble traders to express a short-term bullish view during extreme winter weather.

The UNG ETF is up nearly 20% in 2026. Many investors are counting on significant upside because of the supply-demand imbalance. And the cold weather can tighten that supply even more.

However, the fund is trading significantly below the all-time high it made in 2022 and 2023 after Russia invaded Ukraine. But after that, the fund dropped sharply and was a tough trade for the better part of three years. In fact, the fund is down more than 61% over the last five years.

BOIL Offers 2x Leveraged Exposure to Natural Gas Futures

The ProShares Ultra Bloomberg Natural Gas ETF NYSEARCA: BOIL takes volatility a step further by offering 2x leveraged exposure to daily natural gas futures returns. That leverage makes BOIL especially attractive during rapid price surges tied to cold weather, infrastructure constraints, or sudden demand spikes.

For aggressive traders, BOIL can amplify gains when natural gas rallies over short periods. For example, the BOIL ETF is up nearly 38% year-to-date, which is almost double that of the UNG ETF.

However, the same leverage that boosts upside also magnifies losses. Over the last five years, the BOIL ETF is down 99%, nearly double the UNG ETF's decline.

That makes timing critical. BOIL is best suited for experienced traders who can actively manage positions and capitalize on short-lived momentum rather than those looking to ride a long-term natural gas trend.

Generac: A Power Outage Play That Isn’t Just for Hurricane Season

Generac Holdings Inc. NYSE: GNRC isn’t a natural gas producer, but winter storms can still make it a compelling cold-weather trade. Extreme weather increases the risk of power outages, driving demand for backup generators from both residential and commercial customers.

Many of Generac’s generators run on natural gas, aligning the company with rising interest in gas-fired backup power as grid reliability comes into question. While Generac is often associated with hurricane season, severe winter storms can deliver similar demand surges. If outages persist or grid stress worsens, Generac could see renewed investor interest.

GNRC stock is up more than 22% in 2026. But GNRC is still about 16.7% below its consensus price target, and those price targets are rising. Plus, while Generac looks expensive at 31x earnings, it has a much more digestible forward P/E ratio of around 20x.

Why These Trades Require Careful Timing

What goes up can come down just as sharply, if not more. Both BOIL and UNG are directly tied to natural gas futures, which are among the most volatile commodities in the market. Leverage, daily resets, and futures roll costs can quickly erode returns if prices move sideways or reverse.

Weather-driven rallies can fade rapidly if forecasts change or supply rebounds. Generac faces different risks, including slowing demand if outages are limited or weather normalizes. Investors should view these trades as short-term opportunities, not long-term core holdings.