June 30, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Cheniere Energy (NYSE: LNG ) popped 10% in intraday trading Thursday, after India's Petronet announced that it is talking to the U.S.-based liquefied natural gas, or LNG, company for supplies.
So what: For the small-sized Cheniere, winning a long-term supply contract with Petronet -- India's largest LNG importer by volume -- would obviously be a huge positive for shareholders. The stock was pummeled over the first two weeks of June, but a recent wave of double-digit "up" days suggests that investor sentiment is starting to turn.
Now what: I think Cheniere will keep rallying in the short term. Goldman Sachs recently doubled its LNG demand growth outlook, so I'd expect Cheniere to get a nice boost as traders look for a potent, highly leveraged way to take advantage. For longer-term investors, however, more established dividend-paying names like Golar LNG (Nasdaq: GLNG ) and Teekay LNG (NYSE: TGP ) seem like more prudent plays.
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