It is as clear as daylight that climate change is impacting businesses and economies as much as it is affecting public health. Liquefied natural gas (
LNG Quick Quote LNG - Free Report) companies are poised to profit from global warming since countries and companies are gradually bumping up investments in fuels that emit lower greenhouse gases. This is brightening up the long-term outlook for LNG companies. Encouraging LNG Outlook
Among fossil fuels, natural gas is the cleanest and cheapest. For combustion options, the commodity is the most environmental-friendly. The commodity in its natural form can’t be exported to international markets since it is almost impossible to construct pipelines over oceans. Hence, there is a need of converting natural gas to liquids for shipping overseas.
Thus, to capitalize on the mounting demand for LNG from foreign markets, energy companies are investing massively in liquefaction facilities. Although the coronavirus pandemic hurt LNG business, the long-term outlook remains bright since companies are betting on cleaner burning fuel to combat climate change.
Thus, betting on companies belonging to the global LNG industry is highly advisable to cash in on the long-term growth opportunities.
3 Stocks in the Spotlight
Since picking the right companies from the stock universe is not an easy job, we are employing our proprietary
Stock Screener to zero down on three prospective names. One of the stocks sports a Zacks Rank #1 (Strong Buy), while the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Early last year, a big long-term LNG contract was signed between Kosmos Energy Ltd. (
KOS Quick Quote KOS - Free Report) and BP plc ( BP Quick Quote BP - Free Report) . An innovative near-shore LNG project is being developed at Greater Tortue by the Kosmos-BP partnership. The project, in its initial phase, is likely to deliver approximately 2.5 million tonnes per annum (mmtpa) of LNG. In the subsequent phases, the project might deliver 10 mmtpa of LNG.
BP has gained 20.1% so far this year, thanks to strong second-quarter
results and the company’s prime focus on returning capital to stockholders despite the pandemic. The British energy giant’s board of directors approved a dividend hike of 4% in the June quarter to 5.46 cents per ordinary share. Before announcing results for the third quarter, the Zacks Rank #1 company plans to buy back $1.4 billion worth of shares by utilizing surplus cashflow that was generated through the January-to-June period. Chevron Corporation’s ( CVX Quick Quote CVX - Free Report) Angola LNG Project is among the largest energy projects in Africa. The development is being involved primarily in processing and liquefying natural gas that is produced in Angola for meeting demand from international markets. The project, with daily processing capacity of 1.1 billion cubic feet of natural gas, helps the leading integrated energy company meet the mounting need for natural gas, which is cleaner than burning fuel.
So far this year, the #2 Ranked stock has gained 16.7%, backed by its better-than-expected results for the second quarter. As good news for investors, Chevron reinstates its stock repurchase program and has vowed to buy back $2-$3 billion in shares annually, starting third quarter.
Cheniere Energy, Inc. ( LNG Quick Quote LNG - Free Report) is a leading energy company, being involved in producing and exporting LNG in the United States. Two LNG facilities on the U.S. Gulf Coast are being operated by the Zacks #2 Ranked company. Under long-term fixed fee-based contracts, the company sells liquified natural gas in the international market.
So far this year, the largest U.S. LNG exporter has gained 47.4% and is poised to gain further backed by its strong and stable business model. In 2021, the company is likely to see earnings growth of more than 900%.