Cheniere Energy, Inc. (LNG - Free Report) stock has been on a tear, as it is up nearly 41% over the past six months. While shares have run up considerably and recently reached their highest level in a year, there is still time to add the stock to your portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors why this liquefied natural gas exporter has enough momentum to continue forward?
Why LNG Is a Good Pick
Impressive Stock Performance: Cheniere Energy, a Zacks Rank #1 (Strong Buy) stock, has outperformed the industry over a year. The company’s shares have rallied around 36% over this period, compared with roughly 13% rise recorded by the industry.
Robust Earnings Growth Expectations: The Zacks Consensus Estimate for earnings for second-quarter 2018 for Cheniere Energy is currently pegged at 26 cents, reflecting expected year-over-year growth of 121.1%. Moreover, earnings are expected to register staggering 224% growth in 2018.
Rising Earnings Estimates: Annual estimates for Cheniere Energy have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 72.1% to $1.91 per share. The Zacks Consensus Estimate for 2019 has also moved up 44.7% over the same timeframe to $2.59.
Competitive Advantage: Being the first company to receive Federal Energy Regulatory Commission (FERC) approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal in Cameron Parish, Louisiana, Cheniere Energy enjoys a distinct competitive advantage.
Strong Revenue Growth: The 2018 Zacks Consensus Estimate for this Houston, TX-based company is $7 billion, representing some 25.2% revenue growth over 2017. Next year’s average forecast is $8 billion, pointing to another 13.4% growth.
Upbeat Guidance: Cheniere Energy raised its EBITDA guidance for full-year 2018, following the better-than-expected first-quarter profit. The upbeat forecast reflects higher-than-anticipated realized margins on marketing volumes. Adjusted EBITDA is now expected to be between $2,300 million and $2,500 million compared with the prior guidance ranging $2,000-$2,200 million. The distributable cash flow is likely to be between $350 million and $550 million, up from the prior guided range of $200-$400 million.
Good Industry Outlook: The industry, to which Cheniere Energy belongs, currently has a Zacks Industry Rank of 69 out of 256 (top 27%). Studies have shown that 50% of a stock's price movement is directly tied to the performance of the industry group that it’s in. In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking industry performance into account becomes a necessary measure.
Style Scores: In addition to a top Zacks Rank and favorable industry rank, the stock has a Growth Score of A and VGM Score of B.
Other Stocks to Consider
Other top-ranked stocks in the energy space worth considering include Delek US Holdings, Inc. (DK - Free Report) , Wildhorse Resource Development Corp. (WRD - Free Report) and Equinor ASA (EQNR - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delek US Holdings has an expected long-term earnings growth rate of 10%. Its shares have rallied roughly 142% over a year.
Wildhorse Resource Development has an expected long-term earnings growth rate of 50%. The company’s shares have gained around 118.3% in a year.
Equinor has an expected long-term earnings growth rate of 19.9%. Its shares have rallied roughly 53% over a year.
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