2. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 69
PE Ratio as of August 1: 8.59
Cheniere Energy (NYSE:LNG), the largest producer of liquified natural gas (LNG) in the United States and the second largest in the world, has liquefaction facilities capable of producing around 45 million metric tonnes per annum. Among the company’s assets are two of the biggest LNG export facilities in the world: the Corpus Christi LNG terminal in Texas and the Sabine Pass LNG facility in Louisiana.
Their flagship plant, the Sabine Pass (SPL) LNG Terminal in Louisiana, operates six trains and is one of the world’s largest LNG production hubs. Speaking of growth ambitions, the company hopes to have its first LNG at Corpus Christi Stage 3 by the end of the year. The objective is to have all seven trains operational by the end of 2026. Furthermore, the project is 56% complete and running ahead of schedule.
LNG is viewed as an extremely cheap company to buy right now since its PE ratio of 8.59 is lower than the industry’s weighted average PE ratio of 12.77.
In comparison to the industry average of 1.24, LNG presents a more favorable value proposition with a PEG ratio (5 years projected) of 0.60. Considering its industry, this implies that LNG could be rather cheap.
Cheniere Energy (NYSE:LNG) is one of the best very cheap stocks, with a PE ratio of 8.16 and hedge fund sentiments of 69 in the first quarter, up from 64 in the last quarter. Thomas Bailard’s Bailard Inc. is the largest stakeholder in the company, holding 6,587 shares worth $1.15 million. Despite being cheap, analysts are optimistic about the stock and have given LNG a ” strong buy” rating with an average target price of $196.8 and an upside potential of 11.55%.
In addition to the company’s improved profit forecast, plans for larger dividends and share repurchases, skyrocketing LNG prices, and strong demand from Europe as it looked for alternatives to Russian gas, Cheniere’s shares have surged by nearly 971% since its start.
Although gas quality concerns had a minor impact on first-quarter output, the company earned $4.25 billion, above analyst expectations of $3.97 billion. The company’s dividend increased by 10.13% in Q1 compared to the same quarter last year. LNG intends to boost its dividend by 15% in 3Q24, indicating growth potential.
An all-time high of $1.2 billion was paid in Q1 of 2024 for the buyback of over 7.5 million shares by Cheniere Energy. This action is a reflection of Cheniere’s opportunistic share buyback strategy and dedication to shareholder returns. LNG has considerably reduced the gap between debt paydown and share buybacks, having deployed over 75% of its $4 billion, three-year buyback program in just 50% of the period.
Cheniere Energy operates across the full LNG value chain, from natural gas procurement and liquefaction to storage, transportation, and delivery to international markets. Cheniere is able to take advantage of economies of scale and optimize its operations because of its vertical integration. Moreover, the company keeps its debt at a manageable level.
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding Cheniere Energy, Inc. (NYSE:LNG) in its first quarter 2024 investor letter:
“The strategy’s top detractor was the -5% retrenchment from Cheniere Energy, Inc. (NYSE:LNG), which operates liquid natural gas (LNG) liquefaction facilities for the global transportation of LNG. While revenues and earnings were as expected, management’s initial guidance for the new fiscal year was lower than anticipated. Cheniere was conservative—appropriately so in our view—regarding plant volumes as election-year noise surrounding the regulatory environment could dampen LNG exploration and export activities.”
Even though Cheniere Energy (NYSE:LNG) has the usual risks of market volatility, regulatory changes, and geopolitical tensions, its excellent financials, shareholder-friendly capital allocation policies, and substantial upside potential make it an appealing investment.
