In this article, we will look at Jim Cramer’s top 5 LNG stock picks for the “long haul”. If you want to skip reading about why the LNG market is becoming a lucrative investment opportunity right now, you can go directly to Jim Cramer Recommends These 2 LNG Stocks for the “Long Haul”.
Europe’s Energy Crisis: A Growth Catalyst For LNG and Alternative Energy
Europe’s energy crisis is worsening, as the West bombards Russia with sanctions and Russia retaliates by cutting off gas supplies to the region. On September 2, Gazprom shut down gas supplies to Europe via Nord Stream 1 for an undetermined time, citing routine maintenance and turbine problems. The EU is wary of the political motivations of Russia behind cutting off gas supplies to Europe. On August 2, the Group of Seven, G7, nations accused Russia of weaponizing gas as a counterattack to west-related sanctions.
With the ongoing energy crisis, Europe is faced with a top priority issue: to keep homes heated this winter. European nations are seeking alternatives to Russian gas. On September 2, the government of France announced that it will be restarting nuclear reactors this fall, in wake of the ongoing energy crisis due to the Russian-Ukraine conflict. On September 6, the government of Germany announced that it plans on generating energy from coal and also said that it will keep its two nuclear power plants open, the Isar 2 and the Neckarwestheim.
In addition to seeking nuclear energy solutions to meet its energy requirements this winter, Europe is also working on acquiring LNG from its allies. According to the European Policy Centre, since Russia declared war on Ukraine, Europe’s LNG imports have increased by 70%, and the region has cut its share of Russian gas to 9%, down from 40% before the war. The EPC noted that increased LNG capacity will be crucial to Europe in its attempts to rid itself of Russian energy dependence, and strengthen its energy security.
LNG For The “Long Haul”
Former hedge fund manager and host of Mad Money on CNBC, Jim Cramer, spoke about the investment opportunity sparking up in the LNG market, in an episode on September 1. Cramer said:
“Although it takes a very long time to build one of the liquified natural gas terminals, if you start one now and try to get approval now, it’s seven years before you’re gonna see any results. The opportunity is incredible…”
Cramer spoke about how investing in LNG can “make you a fortune”, as Russia cuts off energy exports to Europe and then highlighted his top 5 LNG stocks for the “long haul”. The journalist investor said:
“Let me highlight 5 LNG stocks that I like for the long haul. Not today, not tomorrow, but for the long haul, because you are finally getting the chance to buy some of them into weakness right now…”
Some of the major players in the LNG market include Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Shell plc (NYSE:SHEL).
Our Methodology
We reviewed Jim Cramer’s top 5 LNG stock picks and read about their LNG projects. Along with each stock, we mentioned analyst ratings, the hedge fund sentiment, and why Jim Cramer is bullish on them. We have ranked these stocks in increasing order of the number of hedge funds that have stakes in them.
The hedge fund sentiment was derived from Insider Monkey’s database, which as of Q2 2022, tracks roughly 900 elite hedge funds.
5. Excelerate Energy, Inc. (NYSE:EE)
Number of Hedge Fund Holders: 18
Excelerate Energy, Inc. (NYSE:EE) is an emerging energy company that is leading the floating storage and regasification units market. The company provides LNG solutions worldwide. The company went public in April 2022 and as of September 12, Excelarate Energy, Inc. (NYSE:EE) has gathered a market value of $2.90 billion.
Jim Cramer is bullish on Excelerate Energy, Inc. (NYSE:EE) because of the company’s fleet of floating LNG facilities and noted that “Excelarate’s (NYSE:EE) the cheapest and fastest way” for Europe to import LNG via sea. Jim Cramer noted that Excelerate Energy, Inc. (NYSE:EE) grew its revenue by over 220% in the second quarter of 2022, and the company is announcing partnerships with European nations that “desperately need energy”.
Wall Street analysts are bullish on Excelerate Energy, Inc. (NYSE:EE). On July 5, Wells Fargo analyst Michael Blum upgraded Excelerate Energy, Inc. (NYSE:EE) to Overweight from Equal Weight and reiterated his $29 price target. Blum noted that the company’s fundamentals have significant upside to benefit from strong global LNG demand and Europe’s efforts to strengthen its energy security. On July 20, Barclays analyst Marc Solecitto revised his price target on Excelerate Energy, Inc. (NYSE:EE) to $27 from $33 and maintained a buy-side Overweight rating on the shares.
On August 10, Excelarate Energy, Inc. (NYSE:EE) announced earnings for the second quarter of fiscal 2022. The company reported earnings per share of $0.78 and beat expectations by $0.59. The company’s revenue for the quarter amounted to roughly $623 million and came in ahead of Wall Street estimates by $219 million.
On August 25, Excelarate Energy, Inc. (NYSE:EE) announced that it has signed an agreement with a leading multinational French utility company, Engie SA, by which Excelerate (NYSE:EE) will provide a floating storage and regasification unit to Germany.
At the close of Q2 2022, 18 hedge funds were bullish on Excelerate Energy, Inc. (NYSE:EE) and held stakes worth $101.6 million in the company.
In addition to Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Shell plc (NYSE:SHEL), Excelerate Energy, Inc. (NYSE:EE) is on the path to benefit from the growing global demand for LNG.
4. Tellurian Inc. (NASDAQ:TELL)
Number of Hedge Fund Holders: 23
Tellurian Inc. (NASDAQ:TELL) is an emerging global natural gas company that owns roughly 11,000 net acres of natural gas properties. The company’s flagship LNG facility is the Driftwood LNG project which has an estimated LNG export capacity of 27.6 million tonnes per year. As of September 12, shares of Tellurian Inc. (NASDAQ:TELL) have gained over 29% year to date.
Jim Cramer named Tellurian Inc. (NASDAQ:TELL) among his top pure-play LNG stocks for the “long haul”. The former hedge fund manager noted that though Tellurian Inc. (NASDAQ:TELL) “is not expected to start shipping liquified natural gas till 2026”, the company has started building its first LNG facility in Texas this year. Cramer said that he had previously mentioned the stock on his show when it had a share price of $6 and asked viewers to “wait for a pullback”. As of September 12, Tellurian Inc. (NASDAQ:TELL) is trading at roughly $4, and Cramer thinks it is “enticing” and worth buying right now.
On August 3, Tellurian Inc. (NASDAQ:TELL) reported earnings for the fiscal second quarter of 2022. The company grew its revenue by 142% year over year and generated a revenue of $61 million in the quarter, beating Wall Street estimates by $25.7 million. This August, BofA analyst Julien Dumoulin-Smith revised his price target on Tellurian Inc. (NASDAQ:TELL) to $4.50 from $6.50 and upgraded the stock to Buy from Neutral, citing natural gas tailwinds for his bullish outlook. The analyst noted that he sees the company’s free cash flows improving in the near term.
At the end of the second quarter of 2022, 23 hedge funds disclosed ownership of stakes in Tellurian Inc. (NASDAQ:TELL) The total value of these stakes amounted to $139 million.
As of June 23, D E Shaw is the largest shareholder in the company with stakes worth $37.5 million. The investment covers 0.04% of D.E. Shaw’s 13F portfolio.
3. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 25
Enbridge Inc. (NYSE:ENB) is a leading multinational energy company that has one of the longest pipeline systems in North America. The company operates pipelines throughout Canada and the United States and transports crude oil, natural gas, and natural gas liquids. On July 29, Enbridge Inc. (NYSE:ENB) announced that it will invest $1.5 billion in Pacific Energy’s Woodfibre LNG project, by which Enbridge will acquire a 30% ownership interest. The Woodfibre LNG project has an estimated export capacity of 2.1 million tonnes per year.
Jim Cramer is bullish on Enbridge Inc. (NYSE:ENB) because of the company’s strides in the LNG space. Cramer thinks Enbridge’s (NYSE:ENB) LNG business “may take a long time to kick in” but the company is offering a strong dividend yield to investors, which makes him like the stock. As of September 8, Enbridge Inc. (NYSE:ENB) has free cash flows of over $3 billion and is offering a forward dividend yield of 6.3%.
Wall Street is bullish on Enbridge Inc. (NYSE:ENB). On September 12, Raymond James analyst Michael Shaw upgraded Enbridge Inc. (NYSE:ENB) to Outperform from Market Perform and raised his price target on the stock to C$60 from C$57.
At the close of the second quarter of 2022, 25 hedge funds were eager on Enbridge Inc. (NYSE:ENB) and held stakes worth $2.36 billion. As of June 30, Rajiv Jain’s GQG Partners is the most prominent investor in Enbridge Inc. (NYSE:ENB) with stakes worth $2.18 billion.
Like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Shell plc (NYSE:SHEL), Enbridge Inc. (NYSE:ENB) is gaining in 2022 and as of September 12, the stock has surged 9% year to date.
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Disclosure. None. Jim Cramer’s Top 5 LNG Stock Picks For The “Long Haul” is originally published on Insider Monkey.
