We recently published a list of the Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024. Since Cheniere Energy Inc (NYSE:LNG) ranks 3rd on the list, it deserves a deeper look.
Wolfe Research said in a note earlier this month that the odds have shifted in favor of Donald Trump following the first presidential debate. However, the firm believes we can see several “unexpected twists and turns” ahead. Wolfe Research also shared a list of stocks that could be potential winners should Donald Trump become the President of the US.
What could happen if Donald Trump becomes President of the US has been a topic of debate and discussion on Wall Street over the past several months. In late January, when the Russell 2000 index jumped, Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, reportedly said that investors might be flocking to the “Trump Trade.” The Russell 2000 is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. Ren said, according to Wall Street Journal, that since Trump is a supporter of low interest rates and less regulation, small-cap stocks, which thrive under Dovish economic policies, were reacting positively to the increasing chances of Donald Trump becoming the leading Republican candidate for the upcoming elections.
In this article, we first scanned Wolfe Research’s basket of stocks the firm believes could be potential winners in case of a Trump presidency. From these stocks we picked 10 companies with the highest number of hedge fund investors.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Cheniere Energy Inc (NYSE:LNG)
Number of Hedge Fund Investors: 69
Wolfe Research expects Cheniere Energy Inc (NYSE:LNG) to benefit if Donald Trump assumes the Presidential office.
Cheniere Energy Inc (NYSE:LNG) is one of the biggest LNG companies in the world. The stock is set to grow amid rising demand of LNG across the world. According to a latest report by Shell, the global gas demand is expected to rise 50% by 2040 amid increasing LNG appetite in Asia. Cheniere Energy Inc (NYSE:LNG) is operating with a wide moat since it’s the second biggest LNG company with huge production infrastructure. Cheniere has facilities with 45 million metric tonnes per annum as of this year. Its Sabine Pass LNG Terminal in Louisiana has six operational trains. Cheniere Energy Inc (NYSE:LNG) has already secured orders or agreements for 95% of its anticipated production capacity extending into the middle of the year 2030.
During its Q1 earnings call Cheniere Energy Inc (NYSE:LNG) talked about this and guidance:
Today, we are reconfirming our full year 2024 guidance ranges of $5.5 billion to $6 billion in consolidated adjusted EBITDA and $2.9 billion to $3.4 billion in distributable cash flow. As we’ve noted previously, 2024 represents our most contracted year-to-date. We still expect 2024 to represent a trough year for EBITDA as we expect our results to trend higher after this year as Stage 3 commences and eventually reach its run rate by the end of 2026.
As a reminder, our operating and financial results and forecast reflect some degree of seasonality as typically higher winter production at our facilities, coupled with typically higher pricing international markets, can provide for a somewhat seasonal weighting of our results to the colder quarters versus the hotter ones. For the balance of the year, we don’t expect meaningful changes to our earnings forecast for the remaining 3 quarters with an immaterial amount of unsold capacity remaining. We still expect to produce approximately 45 million tonnes of LNG this year, inclusive of planned maintenance at both sites, and our guidance continues to reflect only contributions from completed portfolio optimization activities as we do not forecast potential contributions from future opportunities.
During the first quarter, Cheniere Energy Inc (NYSE:LNG) achieved a new record by repurchasing 7.5 million shares for $1.2 billion. It also successfully refinanced $1.5 billion in debt and repaid $150 million in long-term debt. Cheniere Energy Inc (NYSE:LNG) payout ratio is just 10%, which means it’s dividend is extremely safe. It also expects to grow FCF to $3.4 billion in 2026.
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.”
Overall, Cheniere Energy Inc (NYSE:LNG) ranks 3rd on Insider Monkey’s list titled Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024. While we acknowledge the potential of Cheniere Energy Inc (NYSE:LNG), 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 Cheniere Energy Inc (NYSE:LNG) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
