We recently published a list of the 15 Energy Infrastructure Stocks That Are Skyrocketing. In this article, we are going to take a look at where Enerflex Ltd. (NYSE:EFXT) stands against other energy infrastructure stocks that are skyrocketing.
In January 2024, the Biden administration paused federal authorizations for several pending LNG export projects, citing concerns about environmental impacts and domestic energy security. The US Department of Energy later released an assessment indicating that increased LNG exports could add 1.5 gigatons of greenhouse gas emissions annually by 2050, equivalent to a quarter of the current emissions of the US. However, President-elect Donald Trump is set to reverse the Biden administration’s pause on liquefied natural gas (LNG) export approvals, marking a significant shift in US energy policy.
On January 1, Ukraine officially halted the transit of Russian natural gas to several European nations, marking the end of a five-year agreement and closing a chapter in Russia’s decades-long dominance over Europe’s energy markets. The termination of this deal comes amidst the ongoing war between Ukraine and Russia, with neither side willing to negotiate an extension. Europe is expected to rely heavily on liquefied natural gas (LNG) imports. Christoph Halser of Rystad Energy estimates that the EU will need to source approximately 7.2 billion cubic meters of gas from the global LNG market.
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As Europe pivots away from Russian gas, the United States emerges as a key player in filling the supply gap. US LNG exports to Europe have already been rising in recent years, and this shift presents an even greater opportunity for American energy producers. With robust infrastructure and increased LNG export capacity, the U.S. is well-positioned to strengthen its role as a reliable supplier to Europe, enhancing energy security across the continent while bolstering its own energy industry.
The growth of US energy exports hinges on significant investments in infrastructure. According to a report by ICF, prepared for the American Petroleum Institute (API), the development of US oil and gas infrastructure is expected to remain robust through 2035. The report highlights that the primary drivers for continued infrastructure development remain strong. Shale and tight oil resource extraction are projected to continue at a rapid pace, supported by advancements in extraction technologies and favorable market responses to competitive commodity prices. Total capital expenditures (CAPEX) for oil and gas infrastructure are projected to range between $1.06 trillion and $1.34 trillion from 2017 to 2035. This equates to an average annual investment of $56 billion to $71 billion, spanning various infrastructure components, including surface and lease equipment, gathering and processing facilities, pipelines for oil, gas, and natural gas liquids (NGLs), storage facilities, refineries, and export terminals.
As global energy dynamics shift, the United States stands poised to play a pivotal role in ensuring energy security for Europe while driving growth in its own energy sector.
An industrial plant producing natural gas compression equipment, illuminated by night.
Our Methodology
To compile our list of the 15 energy infrastructure stocks that are skyrocketing, we used Finviz and Yahoo stock screeners to rank the top 15 energy infrastructure stocks that achieved the highest gains over the past six months. We also included their hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of 6-month performance, as of January 2.
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).
Enerflex Ltd. (NYSE:EFXT)
Returns in Past 6 Months: 90.38%
Number of Hedge Fund Investors: 12
Enerflex Ltd. (NYSE:EFXT) is a leading provider of energy infrastructure and energy transition solutions, offering a diverse range of products and services to the global energy industry. The company operates in several key markets, including the United States, Latin America, and the Middle East, and is focused on delivering innovative and reliable customized energy infrastructure solutions to its customers.
Over the last six months, Enerflex Ltd.’s (NYSE:EFXT) stock price has increased significantly, driven by the company’s strong operational performance and growth opportunities in the energy infrastructure and energy transition solutions markets. The company is experiencing robust demand for its energy infrastructure and energy transition solutions, driven by the increasing need for natural gas compression equipment, the growing emphasis on low-emissions natural gas, and the focus on decarbonization. At the same time, supply within this sector has become increasingly consolidated, with three major public companies dominating the market. This consolidation has resulted in improved revenue and more favorable contract terms for companies such as Enerflex Ltd. (NYSE:EFXT).
Another factor that has contributed to the increase in Enerflex Ltd.’s (NYSE:EFXT) stock price is the company’s disciplined approach to capital allocation. In Q3, the company reduced its net debt to $692 million, within its target leverage range of 1.5x to 2.0x. This approach has allowed Enerflex Ltd. (NYSE:EFXT) to increase its quarterly dividend by 50%.
Overall, EFXT ranks 4th on our list of energy infrastructure stocks that are skyrocketing. While we acknowledge the potential of EFXT to grow, 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 EFXT 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.