Gas Up with Cheniere

02/24/2014 7:00 am EST

Focus: STOCKS

Jim Powell

Principal Analyst, Global Changes & Opportunities

I'm confident that one of the best growth plays of the next few years will be natural gas, suggests Jim Powell, editor of Global Changes & Opportunities Report.

The cold snaps that the US suffered this winter pushed gas prices up sharply from $3.50 a unit. The quick leap destroyed the illusion that new gas supplies from shale deposits will keep prices on the floor for a decade.

What too few analysts failed to notice is homeowners, factories, power plants, and other users of expensive oil and coal are converting to cheaper natural gas just as fast as they can lay the pipes.

In other words, demand is catching up with supplies and will surpass them at some point. Along the way, prices will continue to climb, and so will profits.

It is also very exciting that the long-expected large scale use of natural gas in transportation is finally getting underway. That's not surprising, since the natural gas equivalent of a gallon of gasoline is only about $1.25.

Now that compressed natural gas refilling stations are being constructed in most cities, and along many highways, I think the use of natural gas in vehicles will expand rapidly. This will be another multi-billion dollar natural gas industry. This is a really a big deal.

Cheniere Energy (LNG) remains my top recommendation in the natural gas sector. With the price of natural gas in many countries as much as four times higher than in the US, Cheniere has a huge profit margin supplying liquefied natural gas (LNG) to a growing list of foreign customers.

The stock is up 186% since we first purchased it in October 2012. I think the price has much further to go, as natural gas continues to replace more expensive energy on a worldwide scale.

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