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In this article, we discuss the 10 best LNG and LNG shipping stocks to buy now. If you want to read about some more LNG and LNG shipping stocks, go directly to the 5 Best LNG and LNG Shipping Stocks to Buy Now.
According to Shell LNG Outlook 2022 report, global trade in LNG climbed 6% to 380 million tonnes in 2021 as several nations recovered from the economic effects of the COVID-19 pandemic. In 2021, the demand for LNG grew fastest in China and South Korea. China surpassed Japan to become the world's top LNG importer after increasing its LNG imports by 12 million tonnes to 79 million tonnes. From a supply perspective, LNG exports increased in 2021 despite several unforeseen outages that reduced the amount of LNG available for delivery. With a 24 million tonne rise year over year, the USA dominated export growth and is predicted to surpass all other LNG exporters in 2022. It is anticipated that the worldwide LNG market will remain competitive in the near future, with a supply-demand gap predicted to materialize in the middle of the current decade.
According to Shell, global LNG demand is anticipated to reach 700 million tonnes annually by 2040, up 90% from the demand in 2021. The majority of this growth is anticipated to be consumed by Asia as local gas production drops, regional economies expand, and LNG replaces higher-emission energy sources, addressing concerns about air quality and advancing toward carbon reduction objectives. It is expected that Asia will continue to drive LNG demand growth through 2040, accounting for 70% of all increases. China added 20 million tonnes per year of term contracts as evidence of the significance of ensuring adequate energy supplies to advance toward its 2060 carbon-neutral ambition.
Following a projected 6% increase in 2021, Bloomberg predicted that LNG demand would increase by 5% to roughly 399 million tonnes in 2022. According to Reuters, as market players attempt to secure cargoes for the winter demand amid rising LNG prices and a dearth of global supply, tanker rates to transport liquefied natural gas (LNG) are anticipated to stay firm. After the conflict in Ukraine and a significant outage at an important U.S. plant Freeport LNG reduced U.S. LNG supplies, the global LNG market lately became even more competitive, forcing participants to obtain vessels for longer-term contracts that may go as long as a year. In July of this year, pricing firm Spark Commodities estimated LNG freight spot costs for the Atlantic at $46,750 per day and for the Pacific at $55,500 per day. The forward LNG freight rates, as indicated by Spark Commodities, however, were $156,000 per day for the fourth quarter of 2022, up from $65,916 per day for the third quarter and from $22,865 per day for the first quarter. Longer-term LNG freight was estimated to cost $95,917 per day on average in 2023, averaging $86,000 per day from 2019 to 2021.
Some of the elite players in the LNG and LNG shipping market include Chevron Corporation (NYSE:CVX), Cheniere Energy, Inc. (NYSE:LNG), and Exxon Mobil Corporation (NYSE:XOM).
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Our Methodology
We selected the best LNG and LNG shipping stocks based on their current or future LNG projects, positive analyst coverage, and potential for higher scalability in the future. We have arranged the list of the best LNG and LNG shipping stocks according to the number of hedge fund holders in each firm. The hedge fund sentiment was assessed from Insider Monkey’s database of elite hedge funds, tracked as of the second quarter of 2022.
10. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders as of Q2, 2022: 25
The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. (NYSE:ENB) in October 1998. Enbridge Inc. (NYSE:ENB) was founded in 1949 and is headquartered in Calgary, Canada. Enbridge Inc. (NYSE:ENB) operates as an energy infrastructure company. It is one of the highest-yielding dividend companies, with a dividend yield of 7.41% as of October 13. Enbridge Inc. (NYSE:ENB) has paid dividends to its shareholders for over 67 years. In terms of Canadian dollars, it has steadily grown dividends over the course of its history, resulting in an average compound annual growth rate of 10% for dividends over the past 27 years. The latest increase came in December 2021, with a 3% increase in dividends to C$0.86 per common share per quarter, translating into C$3.44 per share on an annualized basis.
On September 12, Enbridge Inc. (NYSE:ENB) was upgraded by Raymond James analyst Michael Shaw to Outperform from Market Perform with a C$60 price target, up from C$57. Shaw informs investors in a research report that while the equity has been drifting lower, with share currently trading 8.7% below its 2022 high established in June, Enbridge Inc. (NYSE:ENB) fundamental outlook has only become better with the passage of time. Shaw claims that Enbridge's prognosis for short- and medium-term growth has improved as the company has continued to follow a balanced capital allocation plan.
According to Insider Monkey’s data, 25 hedge funds were long Enbridge Inc. (NYSE:ENB) at the end of the second quarter of 2022, compared to 24 funds in the earlier quarter. Rajiv Jain’s GQG Partners is the leading shareholder of the company, with approximately 52 million shares worth $2.18 billion.
Here is what ClearBridge Investments Dividend Strategy has to say about Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
09. Golar LNG Limited (NASDAQ:GLNG)
Number of Hedge Fund Holders as of Q2, 2022: 27
Golar LNG Limited (NASDAQ:GLNG) was founded in 1946 and is based in Hamilton, Bermuda. Golar LNG Limited (NASDAQ:GLNG) designs, builds, owns, and operates marine infrastructure for the liquefaction and regasification of LNG. As of December 31, 2021, it operated nine LNG carriers, one FSRU, and three FLNGs.
The huge increase in LNG consumption opens up growth possibilities for the company and it can benefit greatly from it till the end of 2030. Due to the strengthening of its balance sheet, the company will be able to explore these development opportunities aggressively. On September 29, BofA analyst Ken Hoexter raised the stock's rating from Neutral to Buy with a price target of $29, up from $23, noting that shares have pulled back by almost 20% since August 25. 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.
Alongwith Chevron Corporation (NYSE:CVX), Cheniere Energy, Inc. (NYSE:LNG), and Exxon Mobil Corporation (NYSE:XOM), Golar LNG Limited (NASDAQ:GLNG) is one of the best LNG stocks to buy now.
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)
08. Sempra (NYSE:SRE)
Number of Hedge Fund Holders as of Q2, 2022: 29
The company was formerly known as Sempra Energy and changed its name to Sempra in July 2021. Sempra (NYSE:SRE) was founded in 1998 and is headquartered in San Diego, California. Sempra (NYSE:SRE) operates as an energy-services holding company in the United States and internationally. On September 8, Sempra (NYSE:SRE) declared a $1.145 per share quarterly dividend, in line with the previous. The dividend is distributable on October 15, to shareholders of the company as of September 23. The company had a forward dividend yield of 3.12% on October 13.
Due to the Russia-Ukraine war, the supply of natural gas to Europe is badly disturbed. Sempra (NYSE:SRE) can exploit this situation and it has already started doing so by signing three contracts with customers in Europe for the supply of American LNG. According to Insider Monkey’s data, 29 hedge funds held stakes worth $285.3 million in Sempra (NYSE:SRE) at the end of June 2022, up from 23 funds in the prior quarter worth $209 million. Israel Englander’s Millennium Management is the biggest stakeholder of the company, with 819,727 shares worth $123.18 million.
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.”
07. South Jersey Industries, Inc. (NYSE:SJI)
Number of Hedge Fund Holders as of Q2, 2022: 33
South Jersey Industries, Inc. (NYSE:SJI) was founded in 1910 and is headquartered in Folsom, New Jersey. South Jersey Industries, Inc. (NYSE:SJI), through its subsidiaries, provides energy-related products and services. The company engages in the purchase, transmission, and sale of natural gas. On September 8, South Jersey Industries, Inc. (NYSE:SJI) declared a quarterly dividend of $0.31 per share, consistent with its previous dividend. The company has been raising its dividends for the past 23 years, which makes it one of the best dividend stocks with high yields. As of October 13, the stock’s dividend yield came in at 3.67%. The company has been paying dividends consecutively for the past 71 years.
As of the end of Q2 2022, 33 hedge funds tracked by Insider Monkey owned stakes in South Jersey Industries, Inc. (NYSE:SJI), down from 36 in the preceding quarter. These stakes have a total value of $582.5 million. Just like Chevron Corporation (NYSE:CVX), Cheniere Energy, Inc. (NYSE:LNG), and Exxon Mobil Corporation (NYSE:XOM), South Jersey Industries, Inc. (NYSE:SJI) is one of the best LNG stocks to buy now.
First Pacific Advisors mentioned South Jersey Industries, Inc. (NYSE:SJI) in its Q2 2022 investor letter. Here is what the fund said:
“South Jersey Industries, Inc. (NYSE:SJI) shares rose 40% on Feb. 24, 2022, on news that Infrastructure Investment Funds, a private equity fund managed by JP Morgan Investment Management, would take the company private. The deal is scheduled to close in the fourth quarter of 2022.”
06. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders as of Q2, 2022: 39
The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc in January 2022. Shell plc (NYSE:SHEL) was founded in 1907 and is located in London, United Kingdom. Shell plc (NYSE:SHEL) operates as an energy and petrochemical company in Europe, Asia, Oceania, Africa, the United States, and the rest of the Americas. Shell plc (NYSE:SHEL), like other all-energy majors, is actively working toward achieving net-zero greenhouse emissions by the year 2050.
According to experts, Shell plc's (NYSE:SHEL) balance sheet is strong and its debt load is reasonable. On September 12, Ryan Todd, an analyst at Piper Sandler, raised his price target for Shell from $75 to $80 while maintaining an Overweight rating for the stock. The analyst maintains a positive outlook for integrated oils, stating that near-record distillate margins are still expected to boost refining forecasts over the winter and into an "equally tight" 2023. Todd finds no shift in strategic priorities across his upstream coverage, despite some upside risk to upstream cost inflation.
According to Insider Monkey’s data, 39 hedge funds were long Shell plc (NYSE:SHEL) at the end of the second quarter of 2022, compared to 37 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held the leading stake in the company, consisting of 20.25 million shares worth over $1 billion.
Here’s what Third Point Management said about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:
“We have continued to add to our position in Shell, as it trades at the same deeply discounted multiple today that it did last year due to a move up in commodity prices. We are engaged in discussions with management, board members, and other shareholders, as well as informal talks with financial advisors. We have discussed various alternatives with the aim of both increasing shareholder value and allowing Shell to effectively manage the energy transition. We have reiterated our view that Shell’s portfolio of disparate businesses ranging from deep water oil to wind farms to gas stations to chemical plants is confusing and unmanageable. Most investors we have discussed this with agree that the company would be more successful over the long term with a different corporate structure. Discussions among the parties have been constructive and will be ongoing since stakeholders clearly see these corporate changes as instrumental, particularly if Shell wishes to become a leader in the energy transition rather than be left behind as a tarnished legacy brand.
Beyond our discussions around corporate structure, there have been two important developments since our last update. First, Shell announced a plan to redomicile its headquarters to the UK and create a single shareholder class. This move allows greater flexibility to modify its portfolio (either through asset sales or spin-offs) and allows for a more efficient return of capital, specifically via share repurchases. Second, fundamental and geopolitical events have highlighted the strategic importance of reliable energy supplies, especially in Europe. Shell’s LNG business, the largest in the world outside of Qatar, will play a critical role in ensuring energy security for Europe. In our view, the value of this business has increased dramatically since our original investment.
While Shell continues to trade at a large discount to its intrinsic value, with proper management we believe the company can simultaneously deliver shareholder returns, reliable energy and decarbonization of the global economy. We look forward to continued engagement with management and other shareholders and to more strategic clarity from the Company.”
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Disclosure: None. 10 Best LNG and LNG Shipping Stocks to Buy Now is originally published on Insider Monkey.
