3 LNG Stocks to Bet On if Trump Re-Takes White House in 2024
With Presidential elections around the corner in the United States, portfolios can be fine-tuned. It’s worth noting that Donald Trump’s chances of winning the 2024 Presidential election have increased to 50%. Therefore, it makes sense to look at some sectors and stocks that will likely benefit if Trump is back to power.
During the first term, the Trump administration had focused on “expediting infrastructure projects including oil and gas pipelines and LNG plants.” If Trump assumes power, I would be bullish on the LNG sector. This column focuses on LNG stocks for a Trump Presidency that are undervalued and can potentially skyrocket.
I must add that LNG produces 40% less CO2 than coal and 30% less CO2 than oil. Irrespective of the election outcome, I am bullish on LNG stocks for the long term. However, if Trump is elected, the upside can be significant in a short time.
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LNG Stocks for a Trump Presidency: Cheniere Energy (LNG)
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Cheniere Energy (NYSE:LNG) stock has been in a tight range in the last 12 months. LNG stock looks undervalued at a forward price-earnings ratio of 17 times and offers a dividend yield of 1.13%. After an extended period of consolidation, LNG stock might be poised for a big breakout rally if Trump is back to power.
As an overview, the company operates the Sabine Pass LNG terminal and the Corpus Christi LNG terminal. The business is a cash flow machine, and for 2023, Chinere reported consolidated EBITDA and distributable cash flow of $8.8 billion and $6.5 billion, respectively.
It’s worth noting that CCL Phase 3 is under construction and is 50% complete. In the current year, CCL stage 3 first LNG is expected. I therefore believe that cash flow upside is likely in 2025 and beyond. For now, a relatively lower distributable cash flow guidance for 2024 seems to be discounted in the stock.
Exxon Mobil (XOM)
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Exxon Mobil (NYSE:XOM) is another subdued name that’s worth considering. The undervalued stock trades at a forward price-earnings ratio of 12.2 times and offers a dividend yield of 3.6%. With some ambitious growth plans related to the LNG segment, I am bullish on Exxon for the long term.
In terms of expansion plans, Exxon Mobil plans to double its LNG business by 2030, focusing on Asia. The company is targeting to handle more than 40 million tons of LNG by the end of the decade.
Exxon Mobil is also building the Golden Pass LNG terminal in Texas. Initially, the plan was to commence operations in late 2024. However, Exxon has deferred the timeline to the first half of 2025. The project has a peak capacity of 18.1 million MT per year.
In another recent news, Exxon will be buying 1.2 million tons of LNG per annum from Mexico Pacific. With high financial flexibility and some big investments, Exxon is among the leading LNG players to consider.
Flex LNG (FLNG)
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Flex LNG (NYSE:FLNG) is among the top LNG stocks for a Trump Presidency. It’s worth noting that FLNG stock trades at an attractive forward price-earnings ratio of 11.4 times and offers a dividend yield of 12%. It’s a good time to accumulate and hold for the medium term.
For 2023, Flex LNG reported revenue and EBITDA of $371 million and $290 million, respectively. It’s worth noting that as of Q4 2023, the company’s fleet reported high contract coverage with a combined charter backlog of 50 years. Further, if options are exercised, the backlog will likely increase to 71 years. This provides clear EBITDA and cash flow visibility. Therefore, robust dividends are secure.
Another big positive is that Flex LNG has a strong balance sheet with no major debt maturity until 2028. Further, the company had a healthy cash position of $411 million. With an attractive book equity ratio, the company is positioned for further acquisition of LNG vessels.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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