Mad Money

Jim Cramer says he likes these 5 liquified natural gas stocks for the long haul

Key Points
  • Investors should look to capitalize on market turbulence by building positions "in companies with exposure to powerful long-term themes, like the rise of LNG," CNBC's Jim Cramer said.
  • On Wednesday, the "Mad Money" host highlighted five companies in the industry he believes could be worthwhile long-term investments.
Jim Cramer says Cheniere and Tellurian are two pure-play LNG stocks to consider
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Jim Cramer says Cheniere and Tellurian are two pure-play LNG stocks to consider

CNBC's Jim Cramer highlighted Wednesday five companies involved in the liquified natural gas industry that he believes could be worthwhile long-term investments.

When the market gets challenging, investors should look to capitalize by building positions "in companies with exposure to powerful long-term themes, like the rise of LNG," the "Mad Money" host said. "I think this will be one of the best stories of the next decade, regardless of what the Fed's doing right now or [Russian president Vladimir Putin] is doing for that matter."

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Cheniere, a pioneer in the LNG industry, is "on track to make $8.62 per share this year, [with] that number expected to grow to $16 in 2023," Cramer said. "Of course, the stock's had a huge run, up 59% year-to-date, but if you believe Cheniere can hit the estimates, then the stock remains pretty darn cheap, trading at just 10 times next year's numbers. But some of that's because this is temporary and the analysts expect the earnings to pull back to around $12 in following years, although it's still fairly cheap on that number, too."

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Tellurian is "not expected to begin shipping liquefied natural gas until 2026, but they finally started building their first facility in Louisiana earlier this year," Cramer said.

"This makes Tellurian inherently speculative, though, and they'll probably have to do more than one round of fundraising between now and 2026 to keep everything on track," Cramer said. However, he added, the longer Russia's invasion of Ukraine continues and disrupts European gas supply, the "more realistic" Tellurian's vision becomes.

Cramer noted in April he encouraged viewers to wait for a pullback in Tellurian shares. At the time, it traded around $6 per share. Now, it's at $4 per share, and Cramer said he thinks it's worth buying here. He also noted Cheniere co-founder Charif Souki is also co-founder and executive chair of Tellurian.

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While Cheniere and Tellurian represent more pure-play LNG companies, Sempra Energy is "more of a diversified utility with a liquefied natural gas export kicker," Cramer said.

"We've got Sempra in the bullpen for the Charitable Trust. ... We're just waiting for a pullback to buy this one because they reported a great quarter. This is the right time to own a utility," Cramer said.

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Excelerate Energy went public in mid-April, Cramer noted, calling the company "the rare recent IPO I can get behind." The company "owns a fleet of ships that work as floating LNG import facilities. If you want to start importing this stuff, Excelerate's the cheapest and fastest way to do it," Cramer explained.

"Now, the stock had been on a nice roll, but in recent weeks it's been clobbered, including a nasty 8% decline just yesterday, possibly because European regulators started talking about imposing price controls on natural gas," Cramer said. "Still, Excelerate's started making deals with European countries that desperately need energy. Even before that, they had 223% revenue growth in the second quarter, but now you're basically getting that quarter for free."

Cramer did caution, however, that Excelerate is slightly more speculative, so it might be better for younger investors who can take on more risk.

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"While this company's basically a toll road operator for energy, they've also got a number of irons in the fire for liquefied natural gas," Cramer said. Just over a month ago, Enbridge announced a partnership with Pacific Energy to build an LNG export terminal in British Columbia. Plus, their pipeline network transports a great deal of the gas that goes to other people's export terminals. The rise of this sub-sector is terrific for their core business. It may take a long time to kick in, but Enbridge is paying you to wait with that 6.3% yield."

Jim Cramer breaks down 5 liquified natural gas stocks worth owning for the long haul
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CNBC Investing ClubCramer breaks down 5 liquified natural gas stocks worth owning for the long haul

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