1. New Fortress Energy Inc. (NASDAQ:NFE)
Average Price Target Upside: 76.41%
Number of Hedge Fund Holders: 20
Cramer has previously praised New Fortress Energy Inc.’s (NASDAQ:NFE) CEO and said:
“… This Wes Edens, he is so good. It’s down like three quarters, like down like 75%. I think that you have to stick with it. I’ve been wrong. I’ve been wrong in New Fortress because I believe in Wes so closely. I’d love Wes to come back on the show.”
New Fortress Energy (NASDAQ:NFE) operates as an integrated company focused on transforming gas into power and providing energy infrastructure services worldwide. It has been navigating a challenging landscape recently, prompting significant adjustments to its financial strategy. On October 5, Morgan Stanley downgraded the company stock to Equal Weight from Overweight with a price target of $15, down from $35.
The company has recently taken several measures to tackle issues related to liquidity and refinancing, which helps alleviate a significant concern. The firm notes that although the company’s shares are currently valued below the fair market price for its existing assets, it faces increased execution risks due to high leverage and an elevated interest burden. The analyst pointed out that project delays, cost overruns, and the premature termination of the FEMA contract in Puerto Rico have exerted additional pressure on the company’s financial health.
To address these challenges, New Fortress Energy (NASDAQ:NFE) has recently negotiated with creditors to exchange several outstanding notes—6.75% notes due in 2025, 6.50% notes due in 2026, and 8.75% notes due in 2029—for new notes with a higher interest rate of 12%, due in 2029. The arrangement also involves securing the new notes with a 49% stake in the company’s operations in Brazil, providing creditors with enhanced collateral.
Additionally, the company moved to improve its capital position through a public offering, successfully selling 46.3 million shares at a price of $8.63, which resulted in a capital raise of approximately $400 million. It is important to note that chairman and CEO Wesley R. Edens demonstrated confidence in the company by purchasing 5.8 million shares in this offering.
While we acknowledge the potential of New Fortress Energy Inc. (NASDAQ:NFE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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