NexGen Energy Niches to Invest in Now: Liquefied Natural Gas


As we’ve talked about, finding new and improved ways to harness energy is where a lot of investment potential lies, but there is also a strong focus within the sector on making it better for the environment. More countries are looking to a cleaner burning fuel, and I suspect natural gas will be a major player in the years ahead. Like with fracking, though, this next-gen opportunity lies not within the energy itself but in how it is transported.

The United States boasts an abundance of natural gas, but as it has long been transported using pipelines, companies’ export options have been limited. As a result, producers haven’t been able to tap into the world’s growing thirst for natural gas.

But that all changed with liquefied natural gas (LNG), which converts natural gas to a liquid state that takes up 1/600th the volume. With a much easier transport solution in place, the United States became a net exporter of natural gas in 2016 for the first time in decades.

The door is now open to continue exporting the country’s wealth of natural gas, and countries as far away as China are now buying LNG from the United States. But since this is still a growing field, the percent transported by LNG carriers versus traditional pipelines remains low. That means significant upside opportunities still await investors who hop on this theme early.

When it comes to LNG, there are the big name, old Wall Street stocks that have exposure to the sector. But those aren’t the best way to play the trend. I look for the names that have more direct exposure to the LNG boom and will truly benefit from this growing theme.

Cheniere Energy (LNG) is a major player in the space and owns the first LNG terminal that was completed in the United States – the Sabine Pass LNG Terminal in Louisiana. Then there is the opportunity to profit from the companies that transports the LNG. Both Golar LNG Limited (GLNG) and Dynagas LNG Partners (DLNG) will be benefit from increased movement of LNG around the globe.

It’s good to have choices, and that’s where the charts can really help us find the best stock to buy at any given moment – and also tell us when it’s time to sell.

For more ways to play the impending energy boom, keep an eye out for my next MoneyWire article. Thanks for reading!

 


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