Dimon’s LNG Rant: 3 Natural Gas Stocks to Buy Despite Biden’s Export Pause


  • Profit from LNG market potential despite the export pause with these stocks.
  • Cheniere Energy (LNG): LNG is positioned for strong performance in the LNG market despite the export pause.
  • Chesapeake Energy (CHK): CHK is rebounding post-bankruptcy with merger prospects and increased natural gas demand.
  • APA Corporation (APA): APA offers robust growth projections and shareholder returns in the natural gas sector.
natural gas stocks - Dimon’s LNG Rant: 3 Natural Gas Stocks to Buy Despite Biden’s Export Pause

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Jamie Dimon, the CEO of JPMorgan (NYSE:JPM), criticized President Joe Biden’s decision to pause new approvals for liquefied natural gas (LNG) exports, describing the move as “enormously naive” and politically motivated. In a shareholder letter, Dimon argued that LNG is vital for reducing global carbon dioxide emissions. Smart money is still clearly bullish on LNG, which forms the backdrop of this list of natural gas stocks to buy.

Furthermore, the ongoing geopolitical tensions and supply chain disruptions have heightened the need for secure and reliable energy sources. LNG, with its ability to be transported globally, has emerged as an attractive option for countries looking to diversify their energy mix and enhance energy security.

Investors interested in capitalizing on the potential of the LNG market may want to consider this list of natural gas stocks. I feel these companies represent the best value for money for investors and should not be overlooked.

Cheniere Energy (LNG)

LNG stock: the Cheniere logo displayed on a phone
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Cheniere Energy (NYSEAMERICAN:LNG) is a major LNG exporter in the U.S., owning several pipelines and storage facilities, which positions it as a significant player in the natural gas industry.

LNG set a financial guidance anticipating a Consolidated Adjusted EBITDA of $5.5 to $6 billion and a distributable cash flow of $2.9 to $3.4 billion. That guidance reflects their projections of continuing robust performance in the LNG market despite the short-term headwinds offered by Biden.

Furthermore, in 2023, LNG reported substantial financial improvements, with revenues hitting approximately $20.4 billion and a net income of $9.9 billion. That marked significant year-over-year growth.

The average stock price target for LNG in 2024 is $201.08, with a potential high of $225 and a low of $178. That sets a consensus upside of 15% to 46%, which makes it one of those natural gas stocks to buy.

Chesapeake Energy (CHK)

Image of an internet browser with Chesapeake Energy's (CHK) homepage on it. The Chesapeake Energy logo on the page is amplified by a magnifying glass.
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Chesapeake Energy (NASDAQ:CHK) has successfully restructured post-bankruptcy, aiming to capitalize on the increasing demand for natural gas.

CHK experienced a significant increase in net income last year, reaching $2.4 billion for the year, accompanied by a healthy free cash flow​. It also aims to balance its capital expenditures and drilling activities in response to market conditions, projecting to drill between 95 and 115 wells in 2024.

More exciting developments could be in the cards for CHK, notably its ongoing merger with Southwestern Energy (NYSE:SWN), which is expected to significantly enhance its scale and operational capabilities. That merger is positioned to make CHK the largest natural gas producer in the U.S. The combined value of the merged companies is expected to be around $24 billion and is anticipated to conclude this quarter.

These factors make CHK one to watch, as it would create a solid blue chip option in the LNG space that’s currently missing from investors’ perception.

APA Corporation (APA)

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APA Corporation (NASDAQ:APA) is an exploration and production company with significant natural gas reserves in the U.S., Egypt and the North Sea.

The company anticipates strong growth in the U.S., projecting an 8% year-over-year increase and over 10% growth from Q4 2023 to Q4 2024. Meanwhile, for Q4 2023, APA reported a robust financial performance with an adjusted net income of $352 million and significant free cash flow. They continue to focus on shareholder returns, planning to redirect a large portion of their free cash flow back to shareholders​.

APA is suitable for income investors, but I believe it’s better for those with a long time horizon. The company’s dividend yield of 3.10% is robust, but its dividend growth rate of 14.29% and its total shareholder yield of 10.30% makes it a strong contender as one of those natural gas stocks to buy now.

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

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/dimons-lng-rant-3-natural-gas-stocks-to-buy-despite-bidens-export-pause/.

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