I wrote about and recommended a trio of natural gas stocks recently — Cheniere Energy (LNG), Chesapeake Energy (CHK), and Devon Energy Corp (DVN), to be precise — that did, and honestly still do, show great potential as investments. Now, there are undoubtedly a variety of ways to approach choosing stocks. What seems to at times come without an instruction sheet is the certainty that… well, Wall Street is all about constant change—and that’s about the only thing you can bet on, really.
As time feels recoiled, the demand for natural gas has increased for various reasons. Many of the market’s brightest minds would argue that there is more potential today for emerging renewable resource markets than ever. And, of course, it only makes sense to capitalize on the convenient timing of this opportunity. Within the natural gas sector exists a sub-sector of sorts that helps in some way to prop up the broader industry surrounding it. We’re talking LNG, or liquified natural gas, in this case.
Natural gas firms often deal with and sometimes specialize in liquified natural gas (LNG). There aren’t many, but a few hard-hitting firms carry the load for this seamlessly functioning sector. Gov’t owned and operated businesses seem most likely to be at the forefront of the LNG industry. However, that’s far from the case—the most prominent producers competing in the LNG space are publicly traded on the NYSE; they don’t do too bad dealing with the competition, either.
I’ve compared and contrasted the biggest names in LNGs, accounting for stock performance and overall analyst sentiment. The experts agree that we’d be wise to consider these portfolio picks:
Shell PLC (SHEL)
Shell plc (SHEL) operates globally as an oil company. SHEL is split into many departments. It explores for, locates, procures, sells, transports, and produces gas-to-liquids fuels and other products. SHEL deals in carbon-emission rights, electricity, natural gas, crude oil, LNG, and heavy-duty vehicle fuel. SHEL trades in crude oil and other feedstocks, including low-carbon, aviation, and marine fuels. Once Royal Dutch Shell plc, SHEL is a massive frontrunner in the LNG industry. SHEL is fully incorporated, providing gas distribution, export/import infrastructure, and dominant marketing services. SHEL was founded by Hugo Loudon on April 23rd, 1907, in the United Kingdom, London, U.K., where it is also headquartered.
SHEL’s stock is, at the time of writing, down 3% YTD but is also closing in on the bottom of its 52-week range. SHEL appears to be undervalued for several reasons: Its market cap currently sits at just over $200 billion–not a big deal. Over twelve months, SHEL has shown $387 million in sales at $11.42 per share. SHEL has a debt-to-equity under 44%, a forward P/E of 6.01x, and a free cash flow of over $25 billion. SHEL has a dividend yield of 4.63%, with a quarterly shareholder payout of 64 cents ($2.56/yr) per share. Analysts who provide pricing forecasts give SHEL a 12-month median price target of $71.50, with a high of $85 and a low of $56.40. The median price for SHEL brings a nearly 30% upside, with its high inching towards 54%. SHEL currently has 21 total buy ratings, 2 outperform ratings, and 8 hold ratings.
TotalEnergies SE (TTE)
TotalEnergies SE (TTE) focuses on producing fuels, natural gas, and low-carbon electricity. Businesses that generate low-carbon power and integrated gas supply make up the Integrated Gas, Renewables & Power divisions of TTE. All LNG production and distribution phases are present in TTE’s Refinery & Chemicals business unit, focusing on refining petrochemicals. The distribution and promotion of petroleum products worldwide are part of TTE’s Marketing & Services division’s purview. TTE‘s inception date is March 28th, 1924, and it has been operating out of its current location in Courbevoie, France.
TTE is second only to SHEL in the LNG business, calling close to one-quarter of the overall market. Most recently down by almost 8% year-to-date, TTE shows current-quarter sales of $6.2 billion at $2.75 per share, as forecasted. TTE has impressive ttm (trailing twelve-month) numbers: Firstly, to exemplify the stock’s robust growth, TTE has reported roughly $263 billion in revenue, a baffling $100+ million more than the stock’s market valuation. From the revenue, TTE boasts a net profit of $20.5+ billion. TTE’s earnings are expected to grow by 20.74% over the next 3-5 years if that happens to really matter. TTE presently has a dividend yield of 4.97%, with a quarterly payout of 73 cents ($2.92/yr) per share. Analysts have given TTE a median price target of $72.22, with a high of $84.78 and a low of $54.69. The median price offers a 26.4% increase over current pricing. TTE has 14 buys, 3 outperforms, and 9 holds.
Exxon Mobil Corp (XOM)
Exxon Mobil Corporation (XOM) is engaged in energy and stakes in 23 mega-tons of LNG globally. XOM’s principal business involves the exploration for, and production of, crude oil and natural gas and the trade, transport, and sale of petrochemicals. XOM‘s “Upstream” segment is organized and operates to explore for and produce crude oil and natural gas. XOM’s Energy, Chemical, and Specialty Products divisions are each involved in selling petroleum products and various other petrochemicals. XOM was founded on November 30th, 1999, as a fusion between Mobil and Standard Oil. XOM is headquartered in Irving, TX.
XOM has a roaring market cap of around $433 billion, and impressively, it has been recorded to have brought in almost $400 billion in revenue for the last twelve months at $13.27 per share. XOM has a P/E of 7.72x, year-over-year earnings growth of 43.70%, with 3-5 year earnings growth at 22.70%. XOM’s YOY net income growth is +43.70%, with EPS at +48.50%. Over the same twelve-month period, XOM had a free cash flow of $46 billion and a yearly profit, or net income, of about $56 billion. XOM has a dividend yield of 3.55%, with a quarterly payout of 91 cents ($3.64/yr) per share. Analysts have assigned XOM a median price target of $125, with a high of $148 and a low of $110. While XOM is currently down by 7.35% YTD and at the stone-cold center of its 52-week range, it also happens to have forecasted current-quarter sales of $88.3 billion at $2.69 per share. XOM has 5 strong buy ratings, 12 buy ratings, and 11 hold ratings.
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