Cheniere Energy Inc. (NYSEMKT: LNG) stock climbed 3.4% yesterday (Wednesday) when U.S. President Barack Obama vetoed Keystone XL pipeline legislation.
The veto injects new stimulus to the boom in transporting crude by rail. Cheniere owns nine facilities that turn natural gas into its liquefied state. They will benefit if the Keystone doesn't get built.
LNG stock has been one of our favorite energy picks for more than four years. Money Morning Global Energy Strategist Dr. Kent Moors first alerted readers to its profit potential in November 2011 - when it was trading at $10.37 a share. It's up 671% since then.
In 2014, Moors said natural gas stocks were poised to provide investors with the best opportunity in a decade. And he again singled out Cheniere as a top pick. It's up about 44% since then.
And it's not too late to profit. Here's why LNG stock will continue to climb...
Investing in Natural Gas in 2015
Consumption of natural gas has grown rapidly over the last six decades. Natural gas accounts for nearly one quarter of the world's energy supply, according to the Energy Information Administration (EIA). Its share of total energy increased from 17% in 1950, to more than 50% in 2014, according to a 2014 Congressional study.
Global natural gas demand is expected to grow by more than half by 2040 - the fastest rate of all fossil fuels - according to an annual forecast by the International Energy Agency (IEA).
Demand for natural gas has been growing faster than oil, thanks to its affordability. And the main drivers are Asia, the Middle East, and Latin America thanks to industrialization and growing economies in these regions.
LNG is the fastest-growing component of the global natural gas market, increasing at a 7% annual rate over the last decade, according to the EIA. For countries that lack indigenous natural gas resources and delivery infrastructure, LNG represents a rapid and cost-effective means of introducing natural gas into their local fuel mix.
This global demand for LNG is why Cheniere is the sector's best bet...
Why Cheniere (NYSEMKT: LNG) Stock Is the Best Play
Cheniere is a liquefied natural gas company that owns and operates the Sabine Pass LNG terminal in Louisiana. Based in Houston, LNG is also developing an export facility in Corpus Christi, Texas.
LNG exporting is possible because of the shale gas boom. And Cheniere is the true pioneer in the LNG exporting space.
"You see, just seven years ago, everyone agreed that the U.S. would be using LNG imports to meet 15% of its gas needs by 2020," Moors said in April 2014. "Now, even Russia's gas behemoth Gazprom acknowledges that the U.S. could be providing between 8% and 12% of all worldwide LNG exports by 2020. That's up from zero LNG exports today."
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The U.S. Department of Energy and the Federal Energy Regulatory Commission have already approved 36 applications for exports. More are pending.
But in December 2014, Cheniere was the first to receive Energy Department approval to export to countries that don't have a Free Trade Agreement with the United States. Within 18 months of that approval, the company signed multiple decade-long contracts in Europe, India, China, and Japan.
Moors noted in 2011 that Cheniere would increase in value with every contract signed. It's already inked five 20-year export contracts with importers in Europe and Asia.
Cheniere is currently in the process of transitioning its import facilities into export facilities. Once construction is completed, exports can begin.
When the first part of the project is accomplished by the end of this year, Cheniere will be processing more than 1 Bcf of natural gas daily. That total will double when the project is completed in 2016/2017.
Moors expects LNG stock to remain volatile in the short term, as natural gas prices steady. But long term, Cheniere will continue to rise.
Of the five analysts that cover the stock, two rate LNG "Strong Buy." Two maintain a "Buy." One rates LNG a "Hold," according to Nasdaq.com.
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