We recently compiled a list of the 10 Best Liquefied Natural Gas (LNG) Stocks to Buy in 2025. In this article, we are going to take a look at where Shell plc (NYSE:SHEL) stands against the other liquefied natural gas stocks.
Liquefied natural gas (LNG) is natural gas that has been reduced to a liquid state through a process of cooling, making it easier, safer, and more efficient to store and ship around the world. The global LNG trade has skyrocketed over the last few years and reached 404 million metric tons in 2023, with demand to rise by another 50% by 2040.
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The United States of America is the largest LNG exporter in the world, with 88.3 million tons shipped in 2024, up 4.5% from the previous year. Europe remains the top destination for American LNG, which has replaced nearly half of the Russian gas supply to the continent after the outbreak of war in Ukraine. Although last year was marked by slow growth, these numbers are expected to receive a significant 15% boost in 2025 due to several new projects coming online, notably the Plaquemines LNG and Corpus Christi LNG Stage 3 projects. These expansions could pay big dividends for the country’s LNG-focused companies, given the demand grows as predicted and prices stay attractive. On their current trajectory, the ballooning LNG exports would support nearly half a million domestic jobs annually and contribute $1.3 trillion to US GDP through 2040 while having a negligible impact on domestic gas prices, according to figures from S&P Global.
Another point to note is that the United States is now capable of exporting LNG at such historic levels without impacting supplies to its own people. The US natural gas output stands near an all-time high and nearly 90% of it remains available for domestic consumption. At the same time, natural gas prices for American households continue to be among the lowest in the world.
The American LNG sector is expected to receive a significant boost after President Donald Trump issued an order last month for the country to resume processing export permit applications for new LNG projects, reversing a pause on permits for new projects that former President Joe Biden put in place early last year to study the environmental and economic effects of the booming export industry. Several key LNG importers from Asia have hailed the move as a necessary step for maintaining their energy security and decarbonizing their energy systems in the long run. Even just a few days ago, after a round of talks with Japanese Prime Minister Shigeru Ishiba, President Trump announced that Japan will soon begin importing a record amount of new shipments of American LNG.
Paul Everingham, CEO of Asia Natural Gas and Energy Association (ANGEA), stated the following after the resumption of LNG export approvals in the United States:
“A recent study by Wood Mackenzie, commissioned by ANGEA, found that Asia’s LNG demand would nearly double between now and 2050, driven largely by significant growth in demand from South and Southeast Asia. The study also forecast that the United States would make up a third of global LNG supply by 2035. However, both LNG demand growth from emerging Asia and the ability of the US to meet it, were contingent on the ‘pause’ being lifted and sufficient US supply being available in coming decades to moderate global prices and ensure that LNG was affordable for nations in South and Southeast Asia. Today’s issuing by President Trump of an order to resume processing of LNG export approvals will enable key projects to proceed and give decision and policy makers in Asia the certainty they require to make long-term decisions about energy. Emerging economies in Asia seek to switch out high-emitting coal use for more gas-fired power as they pursue sensible and well-planned growth in renewable energy sources. The resumption of LNG export approvals in the US will help make this a reality.”
That said, a recent headwind for the American LNG industry has emerged in the form of a burgeoning trade war between the US and China, with American gas exporters caught in the crossfire. China, the largest LNG importer in the world as well as the fastest-growing LNG market globally, was seen as a key growth market for American LNG until President Trump slapped an additional 10% tariff on all Chinese imports earlier this month. This move was followed by Beijing announcing its own retaliatory tariffs on imports from the US, including a 15% tariff on American LNG. Though the two countries are not highly dependent on each other in the LNG arena, with China accounting for only 5% of US LNG exports last year, these numbers are not expected to surge anytime soon if the current political landscape remains the same.
A possible solution could be directing even more liquified natural gas to Europe, especially after buyers there look to replenish depleted inventories following a relatively cold winter, but that is also a short-term fix. The continent’s appetite for gas is expected to decline over the long term, given its strong commitments to reduce carbon emissions by shifting to renewables.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 10 companies operating in the liquified natural gas sector with the highest number of hedge fund investors in Q3 of 2024. Following are the Best LNG Stocks to Buy According to Hedge Funds.
At Insider Monkey we are obsessed with 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).
A gas refinery lit up against the night sky, showing the scale of the company’s petrochemical operations.
Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 48
Ranked at number 5 in our list of the Best LNG Stocks to Invest in is Shell plc (NYSE:SHEL), a global group of energy and petrochemical companies, employing 103,000 people and with operations in more than 70 countries. The oil and gas giant has been a pioneer in LNG for 60 years and supplied 67 million tons of LNG in 2023, accounting for 16% of all LNG supplied globally. Moreover, Shell is also one of the largest LNG shipping operators in the world, accounting for around 11% of the global LNG shipping fleet.
Shell plc (NYSE:SHEL) reported a YoY drop of 16% in its profits by Q4 2024, primarily due to declining oil and gas prices and falling oil demand. However, the company’s share price still surged after it raised its dividend by 4% and launched another share buyback program of $3.5 billion, making this the 13th consecutive quarter of at least $3 billion of share repurchases. The oil major also maintains a strong balance sheet and generated a free cash flow of $40 billion in 2024, higher than the previous year despite the lower price environment. Shell is also actively working to reduce costs and achieved structural cost reductions of $3.1 billion by the end of 2024, one year ahead of its end-2025 target date, and above the range of $2 to $3 billion that it set in 2023.
Shell plc (NYSE:SHEL) has several integrated gas projects in the pipeline to maintain and increase its LNG output in the years to come. In addition to projects in Qatar, it’s leading the development of LNG Canada, which will be able to produce 14 million metric tons of LNG each year when it becomes operational in 2025. Moreover, Shell has also recently signed a multi-billion dollar agreement with Egypt to secure dozens of cargoes of LNG to cover demand for 2025.
Overall SHEL ranks 5th on our list of the best liquefied natural gas stocks to buy. While we acknowledge the potential for SHEL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHEL 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.
