Natural gas is a natural source of energy, mainly containing methane. This source of energy is used for generating power for machines and vehicles, producing electricity, and providing heat. Natural gas is usually found deep in rock formations or hydrocarbon reservoirs. Natural gas is the cleanest fossil fuel, when compared to coal and oil, as it produces less carbon dioxide. A new method of extracting natural gas through hydraulic fracturing, otherwise known as “fracking,” has opened more potential reserves. Fracking has enabled the U.S. to have one of the world’s largest recoverable reserves of natural gas.
In a nervous market trading right near its high, it’s worth looking for value. But there’s not a lot of it around, as stocks are fully priced and expectations for earnings are modest.
One company we’ve looked at before is Chart Industries, Inc. (GTLS) out of Garfield Heights, Ohio. This business manufactures specialized equipment for the production and storage of hydrocarbons and industrial gases. It’s a good business to be in these days and should make for a decent long-term investment.
This is a $2.0-billion company whose share price is down substantially from its all-time record-high set last October. It’s not that this business isn’t growing, but only that the position sold off after not quite meeting consensus.
I like this business and its long-term fundamentals. Energy end-products represent about 53% of the company’s total sales.
The company has also developed specialized expertise in cryogenic storage, which is equipment that can produce temperatures close to absolute zero (-459 degrees Fahrenheit).
Most of Chart Industries’ customers are large, multinational producers of hydrocarbons and gases. The company’s top-ten customers account for 37% of total revenues.
Biomedical customers are 23% of total sales, including respiratory products, cold storage systems, and commercial oxygen generation systems. As a global manufacturer and seller, just less than 60% of total sales are generated by international customers.
You can learn a lot about this business by reading its Form 10-K annual report for 2013. Chart Industries’ share price appreciated 550% from October 2010 to October of last year. It’s now more fairly priced. The company’s stock chart is featured below:
This is a very … Read More
When we first took a look at Chart Industries, Inc. (GTLS) in April, the stock was trading around $80.00 a share. The natural gas build-out is a very worthy investment theme going forward and equity market portfolios should have some exposure.
The oil and natural gas industry is a bright spot in today’s economy, and there is genuine economic growth being generated from this sector. With North America gushing with natural gas, the infrastructure necessary to process, transport, and store it is vast and represents a good investment opportunity.
Chart Industries is a company that manufactures specialized storage solutions for liquefied natural gas (LNG), petrochemical and natural gas processing, medical use gases, and related storage equipment. It’s a solid company with a good track record of managing its business.
Now that there is a push to move the glut of natural gas, there is growing demand for LNG processing plants. Chart Industries was recently awarded a contract to build a C100N liquefaction plant for Stabilis FHR Oilfield LNG LLC. The customer plans to use the processing plant to produce 100,000 gallons of LNG per day in the Eagle Ford Shale region in Texas.
Chart Industries said that Stabilis will likely order four additional LNG liquefaction plants, which can produce either 100,000 gallons or 250,000 gallons per day. Chart Industries has already reserved manufacturing time slots for these additional processing plants.
Back in July, the company won an additional order from Kunlun Energy Investment, which is a wholly owned subsidiary of PetroChina Company Limited’s (PTR) Kunlun Energy Limited for self-contained LNG station modules. The latest order was over $50.0 million, and … Read More
The way things are going, the place to be in capital markets seems to be in energy. Oil and gas stocks, particularly smaller ones, continue to be solid earners in a stock market looking for direction.
While oil prices gyrate on geopolitical events, market speculators have been bidding the commodity based on the slightly positive tone in U.S. economic data. It doesn’t take a lot for market participants to bid oil. The only way to beat it as a consumer is to own a piece of the company.
While many junior oil and gas producers are moving higher in value on the stock market, valuations are particularly lofty. They were high to begin with, before recent events in Syria, but they have only gotten worse. Now isn’t particularly a good time to be considering new positions on the stock market, but the energy sector is a bright light in an otherwise lackluster environment.
Jim Rogers, the “Investment Biker,” wrote that he would continually analyze all capital markets, but trade very little. He would wait until an investment opportunity became so compelling, and then take on a considerable position (with leverage).
I don’t see this kind of opportunity with oil, but I do see it in natural gas as a longer-term, cyclical play after the natural gas build-out is completed.
One of the most successful natural gas producers on the stock market has been Cabot Oil & Gas Corporation (COG). Even with flat natural gas prices, this oil and gas producer is up four-fold since the beginning of 2010. Its valuation is super lofty, but then again, this enterprise is delivering … Read More
People love to call a bottom in the market, but, in my experience, this is a poor investment strategy. Perhaps when you see a turn in the market this might give you an indication that there is a rebound occurring, but one must be careful in any investment strategy to understand the fundamentals of why the price is high or low.
Looking at natural gas prices, we are currently hitting decade-low levels, but I would suggest to any investors hoping for a rebound to hold off, as there are some fundamental factors you should be aware of when looking at this investment strategy in energy. Energy prices are based on supply and demand, that is true; but, an interesting factor occurring in natural gas is a lack of storage capacity. With the new technologies developed in natural gas, the U.S. is producing a huge amount of supply. Combine that with the unbelievably mild winter and you have a situation where the supply of natural gas produced is not being consumed.
Inventory capacity in the U.S. is approximately four trillion cubic feet of natural gas. We’re roughly at 2.5 trillion cubic feet, almost one trillion more than the rolling five-year average at this point in the year. This means that we could fill our natural gas inventory capacity within a couple of months, leaving the market with a massive glut of natural gas. Some firms have stopped extracting natural gas, but not as many as you would think. Some are willing to pump at breakeven levels or even at a loss, because of the need to get cash in the … Read More
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