February 16, 2024 | Daily JAM, Dividend Income, Videos |
Today’s Quick Pick is Cheniere Energy (LNG). Cheniere is a liquified gas supplier and the stock was down about 7.5-8% this year. Much of that drop was a reaction to the Biden administration’s decision to delay permits for new LNG export facilities in order to put pressure on the industry to decrease their methane emissions. However, this is essentially a non-issue for Cheniere since the company’s most recent expansion had already been permitted. The company is on track to go from a capital-intensive/debt heavy stage to putting billions into new sites and export facilities to a generator of free cash flow from those completed facilities. The current dividend is only 1.05% but the total yield, (dividends plus stock buybacks) is about 6.05%. Management has said they believe there will be enough free cash flow to raise the dividend rate by 10% a year from now until the mid to late 20s. In my opinion, demand for LNG is shifting as markets like Japan and China are transitioning to nuclear or solar and wind, but there is still growing demand from places like India, which is looking to transition away from coal. Cheniere is predicting 3% annual revenue growth and I think that’s reasonable and enough to keep the cash flow and dividends moving. I will be Cheniere to my Dividend Portfolio on those future yield prospects.
August 31, 2023 | Daily JAM, LNG, Videos |
Today’s Quick Pick is Cheniere Energy (LNG). There are a number of positive trends for Cheniere right now. The company is adding to its liquid national gas production capacity and has signed long-term contracts with Equinor, Korea Southern Power, China ENN National Gas, and BASF. This is on top of a big increase in sales and margins in its most recent report. (Year to date the stock is up about 10%.) Another factor that makes this a “buy now” stock is that Australia will likely see a liquid natural gas strike. Workers at Woodside Energy have already voted to strike if there’s no contract and Chevron workers look like they may follow suit. These strikes could happen as soon as September, so now is the time to add shares in LNG, as Australia accounts for about 10% of global LNG supply. Morningstar calculates that the shares are at a 2% premium. I think we can expect more upward bumps for LNG and as much as it pains me to accept, I think liquid natural gas will be a necessary global energy transition fuel. I own this stock in my online portfolios.
June 28, 2023 | Daily JAM, LNG, UNG, Volatility |
Today’s video is The Long Hot Summer and Natural Gas. If you’ve been following the weather, you know about the huge heat bubble in Texas where temperatures have reached 120 degrees. High temperatures combined with humidity of around 80% can cause serious health problems and even death. The National Weather Service expects this weather to continue and to spread to other parts of the United States, resulting in more and more people staying inside with the air conditioning cranked all the way up. This spike in temperatures is creating a similar spike in natural gas prices. On June 26, we hit a 16-week high for natural gas prices, and July natural gas futures (for July delivery) have been up 14 out of the last 17 sessions. This price surge has two causes ad is operating on two time frames. In the immediate term, the increased air conditioning use stresses the grid, leading to a reliance on natural gas back-ups to supply the energy needed to cover these demand peaks. This, of course, creates a lot more demand for natural gas in the short term. The second thing is a surprising change in long-term thinking about the future of natural gas. I’m seeing a new wave of 20-year supply contracts from places like China and Japan, suggesting countries are thinking that natural gas has a longer future as a transitional fuel as the world moves toward more sustainable energy sources. The two stocks I would look at here are Cheniere Energy, (LNG) and United States Natural Gas Fund, (UNG). Cheniere is up 6% in the last month and is a good way to play the long-term trend in natural gas use. UNG hit a potential bottom in June and is up 16% in the last month. The bigger gain is a result of the ETF being hammered due earlier in the year. UNG is a far more volatile buy, with much higher risk, so if you’re uncomfortable with risk, stick with the more modest but more predictable gains from Cheniere.
June 27, 2023 | Daily JAM, GNRC, LNG, Volatility |
Heat advisories now stretch from northern Florida to southern New Mexico, and excessive-heat warnings have been issued for much of Texas and parts of New Mexico and Arizona and along the Gulf Coasts of Louisiana, Mississippi and Alabama. New Orleans is included in the zone of greatest heat risk, with actual air temperatures around 100 degrees and humidity that will push heat indexes to 115 degrees. Excessive-heat watches have been posted for the lower Mississippi Valley and include Memphis and Nashville; Huntsville and Birmingham; Jackson, Mississippi; Little Rock, Arkansas; and Poplar Bluff, Missouri. “Extreme heat and humidity will significantly increase the potential for heat-related illnesses,” cautioned the National Weather Service, “particularly for those working or participating in outdoor activities.” The heat will relent somewhat into early next week for portions of the Southeast and Mid-South, but there is no immediate end in sight for Texas, where blistering and brutal conditions look to continue as a heat doe lingers over Texas. And this is only the latest U.S. manifestation of a global problem.
February 23, 2023 | Daily JAM, UNG, Videos |
Today I posted my two-hundred-and-forty-first YouTube video: Quick Pick U.S. Natural Gas Fund Want to grow your portfolio and protect it too? In the toughest investing market in 40 years? Grab my eBook, Your Best Investing Strategy for the Next 5 Years: Free download for subscribers to JubakAM.com. Just click on the image in the right margin. Today’s Quick Pick is United States Natural Gas Fund (NYSEARCA: UNG). The chart for UNG is horrendous, with a peak in August and a steady plummet after that. For 2022, the stock was up about 12%, thanks to late summer surges in price, as natural gas was bid up under the expectation that the war in Ukraine and sanctions on Russia would cause Europe to run out of natural gas. But year to date for 2023, it’s down 44%, as Europe proved better at replacing Russian gas than anyone had expected. As the end of winter approaches, European natural gas stockpiles are at about 65%–above normal for this time of year. UNG has a pattern of up years following down years–in 2020 UNG saw a 43% decline, and in 2021, a 35% increase. As the price of natural gas goes down, demand spikes as buyers look for the cheapest fuels and purchase more natural gas, which sends the pendulum swinging back upward for natural gas providers and funds that track the commodity. Between now and mid-March is a good time to get in on natural gas as we look for the upswing when China and Asia start looking at cheaper natural gas prices and Europe looks to get its stockpile back to 100%.
October 5, 2022 | Daily JAM, Morning Briefing, USO |
Today, Wednesday, October 5, OPEC and its allies, including Russia, approved a two million barrel-a-day cut in oil production. This is the largest cut in production since the onset of the pandemic. Here’s the key paragraph in the OPEC+ statement: “Adjust downward the overall production by 2 mb/d, from the August 2022 required production levels, starting November 2022 for OPEC and Non-OPEC Participating Countries as per the attached table.” On the news, oil and oil stocks extended the rally that began on news leaks yesterday.
October 3, 2022 | Daily JAM, Morning Briefing |
All it takes is a report that OPEC+, the group of oil-producing countries that includes Saudi Arabia and Russia, is considering a big cut in production at its meeting this week to send oil and oil stocks off to the races. As of noon New York time on Monday, U.S. benchmark West Texas Intermediate is up 4.21%, and international benchmark Brent crude is higher by 3.75%.
October 1, 2022 | Daily JAM, Special Reports |
Today, October 1, I’ve gone back through this Special Report to update any parts of my calendar in light of what we’ve learned about the economy, about Federal Reserve interest rate policy, and about the global economy in the last few weeks. This update includes my take on the August jobs report and the September 21 meeting of the Fed. (It’s a complete revision of the original so changes are in the body of the original text.) It is different this time. And it’s likely to “be different this time” for the next five years or so. And you need an investment strategy for that period.
August 30, 2022 | Daily JAM, Millennial, TELL |
Shares of liquified natural gas startup Tellurian (TELL) fell 14.44% yesterday and are down another 3.64% today, August 30, as of 1 p.m. New York time. What’s up? And should you be worried if you own shares? Thanks to watching (and owning) Cheniere (LNG) during the years when that company got its liquified natural gas export facility online, I think investors have a pretty good idea of what to expect from Tellurian as it treads much the same path. Yesterday produced news in two areas that exactly match up with investor concerns during this period of Tellurian’s growth.
August 24, 2022 | Daily JAM, Jubak Picks, UNG, Volatility |
On Tuesday U.S. natural gas prices tumbled after the operators of the Freeport liquefied natural gas terminal said production will resume in early to mid-November instead of October as earlier announced. The terminal, which handles almost 20% of U.S. LNG exports, was knocked out of operation by an explosion in June. The trouble at Freeport has been an especially big deal for European LNG shipments since the United States sends almost 75% of its LNG to Europe and that market has been scrambling to replace natural gas from Russia after that country’s invasion of Ukraine. Natural gas futures dropped 6.5% on Tuesday after hitting $10 per million BTUs for the first time since 2008. Today, Wednesday, August 24, natural gas futures for September delivery are up 2.09% as of 1:30 p.m. New York time.
August 12, 2022 | Daily JAM, LNG, Morning Briefing, TELL, UNG, Volatility |
Yesterday, August 11, U.S. liquefied natural gas (LNG) exported Freeport LNG said it was still pulling in small amounts of natural gas from pipelines at its shuttered LNG export plant in Texas to fuel a power plant. And, this is the important part, it still expects the liquefaction plant, which shut due to a fire on June 8, to return to at least partial service in early October. Thursday, U.S. gas futures jumped about 8% on talk of increased gas flows to the Freeport LNG plant, a drop in gas output, and forecasts for more demand for the fuel over the next two weeks than previously expected. The U.S. Natural Gas Fund (UNG) gained 6.06%.
July 26, 2022 | CORN, Daily JAM, Jubak Picks, UNG, Volatility |
At the close today, July 26, the Teucrium Corn Fund (CORN) was up 2.55% and the Teucrium Wheat Fund (WEAT) was ahead 4.11%. Both of those commodity plays outgained the U.S. Natural Gas Fund (UNG) with its 1.38% move higher. But for consistent gains–and the potential for more–I’d have to say that natural gas is my favorite commodity.
