In this article, we discuss 10 LNG stocks to buy amid Russia-West energy wars. If you want to see more stocks in this selection, click 5 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. (NYSE:EE)’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. (NYSE:EE) 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. (NYSE:EE) at the end of the second quarter of 2022, with collective stakes worth $101.6 million.
In addition to Chevron Corporation (NYSE:CVX), Shell plc (NYSE:SHEL), and Occidental Petroleum Corporation (NYSE:OXY), Excelerate Energy, Inc. (NYSE:EE) 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 (NYSE:TTE) 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 (NYSE:TTE) 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 (NYSE:TTE) 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. (NYSE:TELL) 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. (NYSE:TELL) 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. (NYSE:TELL)’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. (NYSE:TELL) 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 (NASDAQ:GLNG)’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 (NASDAQ:GLNG) 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 (NASDAQ:GLNG) 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 (NASDAQ:GLNG) 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 (NASDAQ:GLNG) 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 (NYSE:SRE) 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 (NYSE:SRE) 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 (NYSE:SRE) 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 (NYSE:CVX), Shell plc (NYSE:SHEL), and Occidental Petroleum Corporation (NYSE:OXY), elite hedge funds are pouring into Sempra (NYSE:SRE) 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 (NYSE:SRE) 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 (NYSE:SRE) 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.”
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Disclosure: None. 10 LNG Stocks to Buy Amid Russia-West Energy Wars is originally published on Insider Monkey.