Another Key Piece Falls into Place for Cheniere Energy
06/30/2014 5:06 pm EST
Even though shares of this energy stock have been on fire in recent months, MoneyShow's Jim Jubak thinks there's still more upside left, so he's raising his target price.
Shares of Cheniere Energy (LNG) have climbed to a new all-time high today, June 30, on news that Australia's Woodside Petroleum (WOPEY in New York) had agreed to a 20-year contract to buy 850,000 metric tons of liquefied natural gas from the second production train of Cheniere's Corpus Christie export facility. Deliveries from the second train at the facility are expected to occur in 2019. (The aggregate design production capacity for Corpus Christi is 13.5 million metric tons a year.)
If Cheniere, which has already secured an export license for its Sabine Pass facility, can get an export license for Corpus Christie. The licensing agencies-the Department of Energy and the Federal Energy Regulatory Commission-consider whether a proposed facility has secured customers for its output as part of their licensing decision. So today's announcement makes it more likely that the Corpus Christie facility will get a license-and that in turn makes it easier for Cheniere to raise money to build the export plant. (Today's news is just one more contract signed by Cheniere at Corpus Christi. On June 2, the company announced, for example, a long-term deal with Spain's Iberdrola.)
Today's gain to a closing price of $71.70, a 2.5% jump, again puts Cheniere Energy above my target price of $70 a share. There is obviously a top to this stock, but I don't think we've reached it yet. The company continues to increase the odds that Corpus Christi will win an export license, but that's by no means absolutely certain-which gives the stock continued upside on that future piece of news.
As of June 30, I'm raising my target price to $79 a share for Cheniere Energy. Shares of Cheniere are up 169.4% since I added them to my Jubak's Picks portfolio on June 25, 2013.
Full disclosure: I don't own shares of any of the companies mentioned in this
post in my personal portfolio. When in 2010 I started the mutual fund I managed,
Jubak Global Equity Fund, I liquidated all my individual stock holdings and put
the money into the fund. The fund shut its doors at the end of May and my
personal portfolio is now in cash. I anticipate putting those funds to work in
the market over the next few months and when I do I'll disclose my positions