We've been covering how companies that export liquefied natural gas are a good buy today - but investors can double their profits by also investing in the industry's shipping sector with Teekay LNG stock.
Liquefied natural gas
- LNG Stock Chart: 3 Stocks Crushing the S&P 500
- Cheniere (LNG) Stock Is Still the Industry Leader
- One LNG Stock to Buy in 2014
- LNG Stock News: This Global Revolution Is Gaining Speed
- LNG Stocks Are Set to Take Off
- A Trillion Reasons to Bet Big on LNG
The Standard & Poor's 500 Index has climbed 41% in the past three years - but there's a group of stocks that is tearing past it as the outlook for their industry gets brighter.
I'm talking about liquefied natural gas (LNG) stocks. Take a look at this LNG stock chart:
Cheniere (LNG) stock has climbed 126% over the past year - and we believe there's a lot more to come.
Houston-based Cheniere Energy Inc. (NYSE MKT: LNG) is the biggest name in liquefied natural gas (LNG) exporting. It was the first company that the U.S. Energy Department granted approval for exporting to countries that do not have a Free Trade Agreement with the United States.
Cheniere's head start on competitors gives it what Forbescalled a near-monopoly for the next few years.
Money Morning Global Energy Strategist Dr. Kent Moors first told Money Morning readers about liquefied natural gas in 2010 - when our favorite LNG stock was trading around $6 a share.
Then in April 2012, this company received federal approval to build the first major LNG export facility in the United States.
Recent liquefied natural gas (LNG) stock news highlights how this global gas revolution is finally gaining traction...
In December, for example, Cheniere Energy Inc. (NYSE: LNG) announced two contracts collectively worth $9.5 billion with Bechtel Oil, Gas & Chemicals to construct LNG trains and facilities in Corpus Christi, Texas.
And along the way, a small group of LNG stocks will become the main focus for investors.
Remember, the LNG process cools natural gas to a liquid form, allowing it to be shipped over long distances. Upon arrival, the liquefied gas is returned its original state before being injected into pipeline for delivery to foreign consumers.
Already, the construction of LNG receiving terminals in Asia and Europe is accelerating.
The European and Asian markets have the biggest need for imports. These markets have a need to meet rising demand and restrain the prices commanded by long-term pipeline-delivered gas.
Luckily, LNG can do both.
Traditionally, natural gas has only been able to develop regional "spot" markets. These are locations where the availability of volume provides an opportunity for traders to execute a price for a quick sale (usually within 72 hours).
This is because the availability of product depends upon the development of import pipelines, which are multi-year, capital-intensive projects.
LNG, on the other hand, can be delivered to a terminal, so it can provide an immediate increase in available local supply.
To the extent that the LNG trade can be sustained, new spot markets are immediately formed around the hubs that develop at the intersection of terminal and delivery pipelines.
And now Qatar - one of the world's largest producers of conventional gas (that is, from freestanding gas fields) - has banked on LNG being the wave of the future.
Qatar has become the first country to commit all of its production to the LNG trade.
And that is a huge vote of confidence for this market.
Considering the number of new tankers involved, this single decision jolted the global shipbuilding industry into one of the most significant increases in business ever recorded.
The Qatari decision was just the first step...
A Global Boost for LNG StocksNew export terminals are being built by other major gas producers - Russia, North Africa, and Canada. Our neighbors to the north have clearly signaled where the U.S. will be moving next.
A project is moving forward at Kitimat, British Columbia, on the North Pacific coast. It is scheduled for completion in 2014.
Developers originally intended this project to be an LNG receiving facility. But by the time the construction began, the intended flow of gas had changed by 180 degrees.
Today, this facility will be 100% committed to exporting LNG.
And the reason is the same one that is prompting so much U.S. discussion...
Truth be told, I don't think we'll see sub-$100-a-barrel oil ever again.
That's not great news for U.S. consumers. But it could be great news for U.S. investors, because this new era of always-high oil prices is going to open the door for liquefied natural gas (LNG).
Investors who accept this new oil-price reality - and position themselves accordingly - can settle back and enjoy the ride: As oil prices soar, expect LNG prices to zoom in tandem.
To find out how to profit from LNG, please read on...