The energy industry has been a hot topic lately. Oil has been rebounding and recently closed above $50, and I think a convincing break above that key level could result in a lot of stocks popping 20% or more.
Over the last handful of trading days, natural gas has also been doing much better. In fact, natural gas futures even hit an eight-month high last week.
There are several factors driving natural gas prices higher right now. The first is that it’s a cleaner alternative to coal for power plants, and it’s considered a lot safer than options like nuclear. The second is that this summer is expected to be warmer than usual, which boosts demand for natural gas used to produce the electricity that keeps our air conditioners working.
Plus, the United States has recently started exporting its natural gas, and overseas demand is only expected to increase.
Time to Look at Cheniere Stock?
I’ve been getting a lot of questions about what stocks to invest in in order to take advantage of the recent strength. I’m not buying quite yet, but that doesn’t mean there aren’t companies worth watching. I’m getting in touch with you today to talk about my favorite name in the space right now: Cheniere Energy Inc. (LNG).
Based in Houston, Cheniere stock is engaged primarily in the liquefied natural gas (LNG, which is natural gas that has been converted to liquid form to make it easier to store and transport) business. It’s among the leading LNG companies in North America and is also one of the largest global exporters of the stuff.
The company owns the Sabine Pass LNG terminal in Louisiana, the Corpus Christi LNG terminal in Texas and the 94-mile-long Creole Trail Pipeline that connects Sabine Pass to various interstate pipelines.
In addition, Cheniere stock is currently expanding its LNG and natural gas marketing business and trading operations.
Cheniere stock has taken a beating, which you can see in the two-year chart above. As natural gas prices fell, so did the stock, tanking from prices above $80 to a low of $22.80 in February. But now that LNG has been consolidating in the $30s, it’s starting to grab not only my attention, but other analysts’ as well.
Daniel Dicker over at The Street recently recommended the stock as a buy under $37 just this week, and Citigroup reiterated its buy rating and $47 price target on the name at the end of May.
What I’m looking for here is for the stock to start climbing off its bottom. It appears to be on its way with the recent break above the 50-day moving average, but it will need to hang above there for a little before it can serve as support. Once LNG gets through $39 on decent volume, it could be a good near-term trading opportunity.
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