In this article, we discuss 10 LNG stocks to buy amid Russia-West energy wars.
Energy War
Before the European Union officially declared price caps on Russian gas, President Vladimir Putin threatened on September 7 to suspend energy supplies if price caps are forced on Russian oil and gas exports. Putin warned the West that it would be “frozen” like a wolf’s tail in the winter, referencing a popular Russian fairy tale. According to a Reuters report dated September 9, Russia’s foreign ministry spokeswoman, Maria Zakharova, said:
“The collective West does not understand: the introduction of a cap on prices for Russian energy resources will lead to a slippery floor under its own feet.”
Russian officials are rather confident that the West’s schemes to impose an artificial price ceiling would fail and energy prices would surge far beyond their expected prices. Vyacheslav Volodin, the speaker for the Duma, Russia’s lower house of parliament, wrote on his Telegram channel:
“What G7 state officials call a price ‘ceiling’ will become a price floor. The global market is not limited to seven countries.”
The West’s energy sanctions on Russia might not have the desired outcome, as China, India and several other consumers continue buying from the world’s biggest producer of natural resources. Europe usually imports roughly 40% of its gas and 30% of its oil from Russia, but the region is trying to cut reliance on the country and expand to other sources. Competitors of Gazprom and other Russian energy providers will gain market share and value as the majority of the European countries shift from Russian oil and gas. Some of the top LNG stocks to buy amid Russia-West energy wars include Chevron Corporation (NYSE:CVX), Shell plc (NYSE:SHEL), and Occidental Petroleum Corporation (NYSE:OXY).
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Our Methodology
We selected the LNG stocks with operations in Europe and the United States, as well as other locations where Russian energy was heavily consumed before the Ukraine war. Optimistic analyst ratings, strong hedge fund sentiment, robust financials, and dividend payouts were also classifiers for selecting these stocks.
We have arranged the list according to the hedge fund sentiment around the securities, which was assessed from Insider Monkey’s Q2 2022 database of about 900 elite hedge funds.
LNG Stocks to Buy Amid Russia-West Energy Wars
10. Excelerate Energy, Inc. (NYSE:EE)
Number of Hedge Fund Holders: 18
Excelerate Energy, Inc. (NYSE:EE) is a Texas-based company that provides flexible liquefied natural gas solutions worldwide. The company offers floating regasification services, infrastructure development, LNG and natural gas supply and distribution services, and LNG terminal services. Excelerate Energy, Inc.’s Q2 revenue jumped 223.1% year-over-year to $622.9 million, exceeding estimates by $219.4 million.
On July 20, Barclays analyst Marc Solecitto reiterated an Overweight rating on Excelerate Energy, Inc. but lowered the price target on the shares to $27 from $33. The analyst appreciates “solid” Q2 midstream earnings and expects the group to “generally fare better than other energy subsectors amid a trading environment rife with volatility”.
According to Insider Monkey’s data, 18 hedge funds were bullish on Excelerate Energy, Inc. at the end of the second quarter of 2022, with collective stakes worth $101.6 million.
In addition to Chevron Corporation, Shell plc (NYSE:SHEL), and Occidental Petroleum Corporation, Excelerate Energy, Inc. is one of the LNG stocks to consider as the West and Europe cut dependence on Russian energy.
9. TotalEnergies SE (NYSE:TTE)
Number of Hedge Fund Holders: 20
TotalEnergies SE (NYSE:TTE) is a French integrated oil and gas company that engages in liquefied natural gas production, shipping, trading, and regasification activities via its Integrated Gas, Renewables & Power segment. The European energy crisis means that TotalEnergies SE is well positioned to be a long-term winner in the market. This makes it one of the best LNG stocks to buy amid Russia-West energy wars.
On September 8, Citi analyst Alastair Syme opened a “positive Catalyst Watch” on TotalEnergies SE ahead of the company’s annual strategy review on September 28. Higher shareholder distributions are likely, the analyst told investors. The analyst sees scope for approximately 20% increase in dividends and share repurchases, and the dividend will potentially “feature more prominently” given the tailwind of a weak euro.
Among the hedge funds tracked by Insider Monkey, TotalEnergies SE was part of 20 hedge fund portfolios at the end of Q2 2022, with combined stakes worth $1.8 billion. Ken Fisher’s Fisher Asset Management featured as the leading stakeholder of the company, with 26.8 million shares worth $1.4 billion.
8. Tellurian Inc. (NYSE:TELL)
Number of Hedge Fund Holders: 23
Tellurian Inc. (NYSE:TELL) is a Texas-based company engaged in natural gas production, liquefied natural gas marketing, and infrastructure assets that include a massive LNG export facility and an associated pipeline. On August 29, the company announced a public offering of senior secured notes and warrants due 2027. The proceeds will support the construction of the Driftwood liquefied natural gas export project in Louisiana. In light of the strong growth catalysts, Tellurian Inc. is one of the best LNG stocks to buy amid Russia-West energy wars.
On August 9, BofA analyst Julien Dumoulin-Smith upgraded Tellurian Inc. to Buy from Neutral with a price target of $4.50, down from $6.50. The LNG rally has presented “obvious benefits” to Tellurian Inc.’s Final Investment Decision (FID) prospects. A secondary benefit has been improved short-term free cash flow given the boost from existing upstream assets, the analyst told investors.
Among the hedge funds tracked by Insider Monkey, 23 funds were long Tellurian Inc. at the end of June 2022, compared to 26 funds in the earlier quarter. D E Shaw is the leading stakeholder of the company, with 12.60 million shares worth $37.5 million.
7. Golar LNG Limited (NASDAQ:GLNG)
Number of Hedge Fund Holders: 27
Golar LNG Limited (NASDAQ:GLNG) manufactures and operates marine infrastructure for the liquefaction and regasification of LNG. For the first half of 2022, Golar LNG Limited’s YTD net income gained 16% to $575.2 million from $496.8 million in the same period last year. Similarly, the Q2 adjusted EBITDA climbed 155% year over year to $100.9 million, and Q2 contractual debt declined to approximately $1 billion from $1.7 billion at the end of the prior quarter. The Q2 EPS of $0.29 also far exceeded the Wall Street estimates of $0.17. This makes Golar LNG Limited one of the best LNG stocks to consider in the current macro environment.
On September 6, B. Riley analyst Liam Burke raised the price target on Golar LNG Limited to $35.50 from $33.50 and maintained a Buy rating on the shares. The analyst said the company has the assets in place to take advantage from the global growth of LNG demand.
According to Insider Monkey’s Q2 data, Golar LNG Limited was part of 27 hedge fund portfolios, compared to 31 funds in the last quarter. William B. Gray’s Orbis Investment Management is the leading position holder in the company, with approximately 11 million shares worth $250 million.
Here is what RiverPark Short Term High Yield Fund & RiverPark Strategic Income Fund has to say about Golar LNG Limited in its Q1 2022 investor letter:
“Golar LNG Ltd. is a lessor and operator of liquefied natural gas (LNG) transport ships, floating natural gas liquefying systems (FLNGs) and a floating storage regasification unit (FSRU). LNG ships take on natural gas that has been cooled into a liquid state to permit transport to distant ports for re-gasification and distribution. The FLNGs, positioned near offshore gas production wells, efficiently liquefy natural gas on-site using cold seawater, avoiding the need for pipelines linked to on-shore liquefaction facilities. The FSRU stores LNG and has onboard facilities that convert LNG back into its gaseous state. Comfortable with the quality of the company’s hard assets and confident that cash flow from operations would permit deleveraging, in October 2021, we participated in the new issuance of Golar’s 7% unsecured bonds due 2025. The new issue proceeds were used to repay their convertible bond due in February 2022. At that time, leverage net of cash was 6.6x and leverage net of cash and equity investments was 4.8x…” (Click here to see the full text)
6. Sempra (NYSE:SRE)
Number of Hedge Fund Holders: 29
Sempra (NYSE:SRE) is a California-based energy-services holding company that deals in electric services and natural gas. Its Sempra LNG division develops and invests in liquefied natural gas facilities and natural gas infrastructure in North America. On September 8, Sempra declared a $1.145 per share quarterly dividend, in line with previous. The dividend is distributable on October 15, to shareholders of the company as of September 23. The company delivered a dividend yield of 2.61% on September 13.
On July 21, Sempra announced development projects in Mexico which will allow Mexico’s Federal Electricity Commission to potentially optimize the current natural gas pipeline systems, provide extra sources of LNG for isolated markets in Mexico, and continue to expand LNG supplies to the global market.
Among the hedge funds tracked by Insider Monkey, 29 funds reported owning stakes in Sempra at the end of June 2022, compared to 23 funds in the last quarter. Israel Englander’s Millennium Management is the largest stakeholder of the company, with 819,727 shares worth $123.18 million.
Like Chevron Corporation, Shell plc (NYSE:SHEL), and Occidental Petroleum Corporation, elite hedge funds are pouring into Sempra given the higher energy demand stemming from the Russia-West energy wars.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about Sempra in its Q1 2022 investor letter:
“Energy shortages in Europe were only intensified by the invasion. The conflict and economic sanctions against Russia have brought to the forefront EU dependence on Russian oil and natural gas. As Germany and its EU neighbors look to diversify their natural gas suppliers, some U.S. companies stand to benefit. Within the portfolio, Sempra Energy is well-positioned. Sempra’s previously underappreciated portfolio of infrastructure assets, with existing as well as prospective liquified natural gas (LNG) facilities, should benefit from renewed interest in U.S.-sourced LNG. The U.S. commitment to increase LNG exports to Europe over the coming years should create a favorable long-term demand environment and hopefully regulatory framework benefiting Sempra along with other natural gas and LNG suppliers. Sempra’s core utilities operations in California and Texas continue to generate solid mid- to high-single-digit earnings growth, and it enjoys additional growth opportunities from renewable natural gas (RNG), hydrogen and other renewable sources of energy.”
5. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 39
Shell plc (NYSE:SHEL) is a London-based energy and petrochemical company that operates through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. The company explores for and extracts crude oil, natural gas, liquefied natural gas, and natural gas liquids. On July 28, Shell plc (NYSE:SHEL) declared a $0.50 per ADS quarterly dividend, which is payable on September 19. As of September 13, the company delivers a dividend yield of 4.52%.
Piper Sandler analyst Ryan Todd on September 12 raised the price target on Shell plc (NYSE:SHEL) to $80 from $75 and reaffirmed an Overweight rating on the shares. The analyst remains constructive on the integrated oils group, noting that near-record distillate margins continue to support upside in refining estimates and this will potentially extend to the winter and into an “equally tight” 2023.
According to Insider Monkey’s data, 39 hedge funds reported owning stakes worth $3.46 billion in Shell plc (NYSE:SHEL) at the end of Q2 2022, compared to 37 funds in the prior quarter worth $5.6 billion. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 20.25 million shares exceeding $1 billion in value.
Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:
“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”
4. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Holders: 52
EQT Corporation (NYSE:EQT) is a Pennsylvania-based energy company engaged in hydrocarbon exploration and pipeline transport, supplying petroleum, natural gas, natural gas liquids, and liquefied natural gas. The company is positioned to benefit from Europe’s energy crisis with more than 30% upside potential.
On September 6, EQT Corporation announced the acquisition of THQ Appalachia’s upstream assets and XcL Midstream’s gathering and processing assets for $5.2 billion in cash and stock. The company also doubled its share repurchase program to $2 billion, and raised its year-end 2023 debt reduction goal to $4 billion from $2.5 billion. This makes EQT Corporation one of the best LNG stocks to buy amid Russia-West energy wars.
Mizuho analyst Vincent Lovaglio on August 18 raised the price target on EQT Corporation to $59 from $55 and reiterated a Buy rating on the shares. Structural undersupply, driven by multi-year underinvestment, should support higher than anticipated commodity prices and larger than expected cash returns, making the energy group a relatively good investment versus the broader market, the analyst told investors in a bullish thesis.
According to Insider Monkey’s database, 52 hedge funds were long EQT Corporation at the end of the second quarter of 2022, with collective stakes worth $2.3 billion. Dan Loeb’s Third Point is the leading stakeholder of the company, with 7.5 million shares worth about $259 million.
Here is what ClearBridge Mid Cap Growth Strategy Fund has to say about EQT Corporation in its Q2 2022 investor letter:
“We initiated a position in EQT, the largest natural gas producer in the U.S., which possesses high-quality acreage within the Marcellus Shale basin. EQT has benefited from tight supply and demand dynamics as cleaner-burning natural gas takes global share from coal and exports to Europe and Asia provide an avenue of demand growth. Longer-term contracts enhance EQT’s earnings visibility as Europe eliminates its dependence on Russian gas.”
3. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 59
Chevron Corporation is an American multinational provider of crude oil and natural gas. The company also specializes in the liquefaction, transportation, and regasification of liquefied natural gas. On September 12, Piper Sandler analyst Ryan Todd maintained an Overweight rating on Chevron Corporation and raised the price target on the shares to $190 from $189. The analyst sees upside for the integrated oils group, which will extend to 2023. Despite some upside risk to upstream cost inflation, the analyst noted that there would be no change to priorities across his upstream coverage.
Among the hedge funds tracked by Insider Monkey, 59 funds reported owning stakes in Chevron Corporation at the end of Q2 2022, compared to 53 funds in the last quarter. Warren Buffett’s Berkshire Hathaway is the biggest position holder in the company, with a stake worth $23.3 billion.
Diamond Hill Capital mentioned Chevron Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp.. The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
2. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 65
Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure company that engages in liquefied natural gas businesses in the United States. On September 12, the company raised its guidance for the year. It expects 2022 consolidated adjusted EBITDA of $11 billion-$11.5 billion, versus a prior outlook of $9.8 billion-$10.3 billion. The 2022 distributable cash flow is now projected to be $8.1 billion-$8.6 billion, compared to an earlier guidance of $6.9 billion-$7.4 billion. Cheniere Energy, Inc. also boosted its stock buyback program by $4 billion and extended it for three more years, as well as approving a revised long-term capital allocation plan.
On August 16, Barclays analyst Marc Solecitto raised the price target on Cheniere Energy, Inc. to $186 from $160 and reaffirmed an Overweight rating on the shares. Cheniere Energy, Inc. remains one of the firm’s favored picks due to the secular fundamental tailwinds supporting additional expansion, a conservative valuation, its defensive cash flow characteristics, and short-term catalysts, said the analyst.
According to Insider Monkey’s data, Cheniere Energy, Inc. was part of 65 hedge fund portfolios at the end of the second quarter of 2022, up from 62 funds in the last quarter. Carl Icahn’s Icahn Capital LP is the biggest stakeholder of the company, with 5.6 million shares worth $746.5 million.
Here is what ClearBridge Global Infrastructure Value Strategy has to say about Cheniere Energy, Inc. in its Q3 2021 investor letter:
“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”
1. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 66
Occidental Petroleum Corporation is a Texas-based company engaged in the development of oil and gas properties. The company produces oil, condensate, natural gas liquids, and natural gas. On July 27, Occidental Petroleum Corporation declared a quarterly dividend of $0.13 per share, in line with previous. The dividend is payable on October 17, to shareholders of the company as of September 12. It is one of the top LNG stocks to buy amid Russia-West energy wars.
Piper Sandler on September 12 maintained an Overweight rating on Occidental Petroleum Corporation and lowered the price target on the shares to $92 from $93. Analyst Ryan Todd issued the ratings update.
Among the hedge funds tracked by Insider Monkey, 66 funds were long Occidental Petroleum Corporation at the end of Q2 2022, compared to 67 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway owns about 20% of the company stock and is the leading position holder in Occidental Petroleum Corporation.
Here’s how Smead Capital Management mentioned Occidental Petroleum Corporation in its Q2 2022 investor letter:
“For the quarter, our best-performing stocks were Continental Resources (CLR), Merck (MRK) and Occidental Petroleum Corporation. Despite a steep sell-off in June in the oil and gas stocks, two of our oil stocks made the quarterly list.
If you are wondering how we are outperforming the S&P 500 Index in the first half of the year, look no further than our top three performers. Occidental Petroleum (OXY), Continental Resources (CLR) and ConocoPhillips (COP) soared in value and were barely represented in the S&P 500 Index. To quote Jerry Jones, owner of the Dallas Cowboys, “We are in the first quarter on higher energy prices!””
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