The natural gas and liquefied natural gas (LNG) industry has struggled over the past few years, but is now picking up momentum and is expected to continue into 2025. Growing demand, only partially offset by supply, is supporting LNG price movements and creating a strong tailwind. for US LNG reserves. This tailwind includes increased exports, compounded by higher prices and leverage to increase earnings and margins. Profit is critical to this market due to sustainable cash flow and return on capital. The driver of demand is industry. Industry around the world is turning to natural gas to reduce emissions, and demand will increase over time as infrastructure and services improve.
The EIA expects LNG prices to average $3.00 in 2025, but the forecast could be low due to new projects coming online. Two projects, Plaquemines LNG Phase 1 and Cheniere Corpus Christi Phase 3, will account for at least 75% of capacity coming online this year. However, the $3 average is about 36% higher than the 2024 average, with U.S. exports projected to grow 17%. The bottom line is that natural gas is reaching critical mass, and U.S. LNG companies are well positioned to benefit from it.
Cheniere: growth and leverage in 2025
Cheniere Energy today
Cheniere Energy
As of 3:58 pm ET
- 52 week range
- $152.31
▼
$228.10
- Dividend yield
- 0.89%
- P/E ratio
- 14.38
- Target price
- $225.00
Cheniere New York Stock Exchange: LNG is the largest exporter of natural gas in the United States, with revenue expected to grow nearly 20% in 2025. Analysts tracked by MarketBeat also forecast solid earnings but expect deep year-over-year declines due to capital spending projects, including the completion of Corpus Christie Phase 3. That impact will quickly fade, leaving the company with increased capacity and improved earnings , which will allow you to maintain a healthy balance sheet and return on capital.
Cheniere’s capital return prospects are robust, including dividends and share repurchases. The dividend yield is low, around 0.9%, and the stock trades at around 18 times earnings, but it is reliable, the distribution is expected to grow, and share repurchases are significant. Share repurchases reduced average dilution by 6.2% in the third quarter and by 5.6% for the first nine months of fiscal 2024. On the balance sheet, improved cash flow allows debt to be reduced, leaving long-term debt leverage at 2.4x and equity increasing. by 3.65%.
Analysts rate the stock a Moderate Buy and raise their 2025 price targets. Consensus implies a fair value close to early January prices, but it has risen 35% over the past twelve months, with the revision bringing it to $260. A move towards $260 provides 35% upside potential from critical resistance levels.
High-yield Kinder Morgan rises on forecasts
Kinder Morgan today
Morgan’s children
As of 3:58 pm ET
- 52 week range
- $16.47
▼
$28.81
- Dividend yield
- 4.07%
- P/E ratio
- 24.81
- Target price
- $26.25
Morgan’s children New York Stock Exchange: KMI is well positioned for the LNG boom in 2025 as an intermediary connecting U.S. natural gas producers to end markets, including export terminals. To support them, the company operates approximately 79,000 miles of pipelines, liquefaction, storage and distribution terminals. Its revenues and earnings are linked not so much to the price of LNG, but rather to the volume of gas transported, which is growing. Volume is increasing due to increased demand, acquisitions and capital projects and is expected to continue to grow over the next several years.
Analyst sentiment is driving KMI stock prices higher. Consensus lagged the market in early January, but has risen over 30% over the past twelve months, with revisions pushing it into the mid-30s. A move towards the mid-30s would represent a 25% gain from the critical target resistance level.
ETF investors should turn to AMLP
Alerian MLP ETF Today
As of 4:10 p.m. ET
- 52 week range
- $42.25
▼
$51.47
- Dividend yield
- 5.92%
- Assets under management
- $9.74 billion
ETF investors also have options. Alerian MLP ETF NYSEARCA:AMLP targets US LNG intermediaries and generates high returns.
At the beginning of 2025, the dividend distribution will be more than 7.5%, with payouts and share buybacks expected to increase.
The technical action is also promising, with shares rising. The price action in 2024 has the market testing resistance at the long-term high, which is likely to be broken in early 2025.
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