We recently compiled a list of the 12 Best Gas Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Cheniere Energy Inc. (NYSE:LNG) stands against the best other gas stocks to buy.
The Future of Natural Gas: Sustained Growth Ahead?
The global gas industry plays a crucial role in the energy landscape, providing a relatively cleaner alternative to coal and oil. As countries aim to reduce carbon emissions and transition to more sustainable energy sources, natural gas has become increasingly important. According to a report by The Business Research Company, the global natural gas market was valued at $1.029 trillion in 2023. The market is expected to grow at a compound annual growth rate (CAGR) of 7.7% during 2024-2028 to reach a value of $1.518 trillion by the end of the forecast period. The Asia-Pacific region was the largest market for natural gas globally in 2023.
The International Energy Agency’s 2024 Global Gas Security Review indicates that natural gas consumption rose by 2.8% in the first three quarters of 2024 compared to the previous year, surpassing the average growth rate of 2% seen from 2010 to 2020. Most of this increase came from rapidly growing markets in Asia. However, estimates show that the growth rate slowed to below 2% in the third quarter of 2024, partly due to a recovery in demand that began in late 2023 and also because higher gas prices affected consumption.
For the full year of 2024, global gas demand is projected to increase by over 2.5%, reaching a record high of 4,200 billion cubic meters (bcm). The Asia-Pacific region is expected to contribute nearly 45% of this additional demand. A significant portion of this growth is driven by industrial and energy use, supported by ongoing economic growth in Asia. Additionally, Europe’s industrial gas demand is recovering. Looking ahead, global gas demand is anticipated to rise by another 2.3% in 2025, with Asia continuing to play a crucial role in driving this growth.
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The demand for natural gas in the electric power sector is a major growth driver. Natural gas plants are more efficient and produce fewer emissions compared to traditional coal-fired plants. According to the US Energy Information Administration (EIA), in 2023, the United States consumed 32.50 trillion cubic feet of natural gas, which represents around 36% of the country’s total energy consumption. The electric power sector was the largest user, consuming approximately 40% of the total natural gas. Natural gas accounted for about 42% of the energy used in electricity generation in 2023.
In addition to this, innovations in extraction technologies, such as hydraulic fracturing and horizontal drilling, have made it easier and more cost-effective to produce natural gas. These advancements are enhancing supply capabilities and driving down costs, further supporting market growth.
Methodology
To compile our list of the 12 best gas stocks to buy according to hedge funds, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the largest gas companies by market cap. We also consulted various online resources and reviewed our own rankings. This exercise provided us with a list of more than 30 gas stocks. We focused on the top 12 gas stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 12 best gas stocks to buy were then ranked in ascending order based on the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? 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).
Close-up of a liquefied natural gas terminal expelling plumes of smoke.
Cheniere Energy Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 62
Cheniere Energy Inc. (NYSE:LNG) is a major producer and exporter of liquefied natural gas (LNG). As the second largest producer of LNG globally, the company plays a crucial role in meeting the rising demand for natural gas by providing a clean, secure, and affordable energy solution. Cheniere Energy Inc. (NYSE:LNG) operates major liquefaction facilities at Sabine Pass and Corpus Christi on the US Gulf Coast.
In September 2024, the company celebrated a significant milestone by loading its 1,000th LNG cargo for export at the Corpus Christi facility, which was delivered to Italy. Since 2016, Cheniere Energy Inc. (NYSE:LNG) has exported around 3,720 cargoes to approximately 40 different markets worldwide. This strong export performance highlights the company’s global reach and operational efficiency.
Cheniere Energy Inc. (NYSE:LNG) is also expanding its production capabilities. The company is progressing on the Corpus Christi Stage 3 project. The first LNG production from this expansion is expected by the end of 2024, with substantial completion anticipated in early 2025. This expansion will enhance Cheniere Energy Inc.’s (NYSE:LNG) total production capacity significantly.
In addition to its operational growth, the company has been actively managing its capital structure. In the third quarter of 2024, Cheniere Energy Inc. (NYSE:LNG) repurchased about 1.6 million shares for approximately $282 million and increased its quarterly dividend by 15% to $0.50 per share. Through the first nine months of 2024, the company has returned about $2 billion through share repurchases. Since launching its 2020 Vision Plan in September 2022, Cheniere Energy Inc. (NYSE:LNG) has repurchased around 10% of its outstanding shares. This commitment to returning value to shareholders demonstrates financial strength and confidence in future growth. With its leading position in the LNG market, ongoing expansions, and robust shareholder returns, Cheniere Energy Inc. (NYSE:LNG) represents a compelling investment opportunity for those looking to invest in the energy sector.
Overall, LNG ranks 6th on our list of the best gas stocks to buy according to hedge funds. While we acknowledge the potential of LNG as an investment, our conviction lies in the belief that 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 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.