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Is Cheniere Energy (LNG) a Good Stock to Buy?

Following a major international trade deal, Cheniere Energy (NYSEMKT:LNG) looks like a strong energy play. However, deeper analysis is needed to assess why this is an important time to be watching the energy sector, and the natural gas sector in particular. So, is LNG a good stock to buy? In short, absolutely.

LNG stock: the Cheniere logo displayed on a phone
Source: IgorGolovniov / Shutterstock.com

This morning it was reported that the U.S. and EU had struck an important deal that will likely send natural gas producers shooting up. Let’s take a closer look at what is on the table and why LGN stock is in focus.

Why Is LNG a Good Stock to Buy?

For the past few weeks, both the U.S. and Europe have struggled to reduce their dependence on Russia’s oil exports. U.S. President Joe Biden and President Ursula von der Leyen of the European Commission have struck a deal. The U.S. will provide “at least 15 billion cubic meters more of liquified natural gas (LNG) to Europe” within the year ahead.

In this case, the acronym LNG has two meanings. It refers to liquified natural gas, which is about to become one of the energy sector’s hottest commodities. It is also the trading symbol for one of the leading U.S. natural gas providers. Cheniere Energy chose it for a specific reason: it reminds investors what the company primarily deals in.

A Growing Field

Now, LNG producers are about to see a significant spike in demand as the U.S.-EU trade deal takes shape. LNG stock is rising steadily today, as are its sector peers Cabot (NYSE:CBT) and Chesapeake Energy (NASDAQ:CHK). These names shot up earlier this month on speculation that reliance on non-Russian LNG would increase. Now we are seeing exactly that outcome develop. For U.S. companies in the LNG space, this means a promising future.

LGN stock was a good bet before demand started to rise. And as InvestorPlace contributor Tezcan Gecgil recently noted, its impressive sales figures and purchase agreements have led to stable cash flow and mostly good earnings for the third quarter of 2021. The company is also planning a significant expansion at its Texas facility that will help it produce more liquefied natural gas just as demand picks up. Gecgil considered it a stock to buy to guard against inflation, but today’s news should give investors fresh incentive to double down on it before the international trade deal takes effect and LNG stock shoots up.

Is LNG a Good Stock to Buy? The Bottom Line.

Investors should be paying close attention to the liquified natural gas sector. The recent deal represents a major step forward in the global quest for energy independence. Indeed, 15 billion cubic meets is no small figure, but it’s important to note that reports prefaced it with “at least.” That means that there is at least a chance there will be even more opportunity for U.S. LNG producers in the coming months ahead.

For investors, this represents an opportunity to cash in on a market trend before it fully takes shape. So, is LNG a good stock to buy? Absolutely. Investors should be eyeing LNG plays, and LNG stock should be at the top of every list. It was a good buy for an unstable economy before an international trade deal provided the catalyst it needed for shares to soar.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/03/is-cheniere-energy-lng-a-good-stock-to-buy/.

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