Cheniere Energy’s recent market performance
Cheniere Energy (LNG) stock saw a sharp rally on April 9, 2018, due to a general recovery in the US energy sector and broader markets. There were signs of moderating trade war tensions between the US and China. Overall, Cheniere Energy has risen 4.1% since the beginning of April. At the same time, the Alerian MLP ETF (AMLP) and the Energy Select Sector SPDR ETF (XLE) have gained 2.7% and 3.7%.
Cheniere Energy’s stronger recovery is due to its export-led LNG (liquefied natural gas) business. LNG isn’t expected to see a tariff increase considering China’s current initiative to move towards a cleaner burning fuel and the importance of energy security. In the event of a full-blown trade war, global growth could be impacted and result in lower global LNG demand. Lower demand could impact the company’s LNG volumes.
As trade war tensions decrease, there could be another recovery in investors’ sentiment towards Cheniere Energy. The company has over 85% of its LNG capacity tied to take-or-pay contracts.
Cheniere Energy’s historical performance
Cheniere Energy has gained 14.8% in the past year. At the same time, Cheniere Energy Partners (CQP) has lost 9.3%, while Cheniere Energy Partners LP Holdings (CQH) has gained 10.6%. Cheniere Energy Partners’ underperformance relative to Cheniere Energy and Cheniere Energy Partners LP Holding could be due to its complex structure.
Cheniere Energy has outperformed AMLP and XLE by more than 3,940 basis points and 1,618 basis points, respectively, in the past year. Cheniere Energy’s outperformance relative to XLE could be due to its strong cash flow growth protected by long-term fee-based sales and purchase agreements and the timely completion of LNG Trains.
In this series, we’ll discuss Cheniere Energy’s technical indicators and price forecast. We’ll also discuss Cheniere Energy’s valuations and analysts’ recommendations.