What 2012 Holds for Cheniere Energy

With 2012 just beginning, now's a great time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.

Today, let's take a look at Cheniere Energy (AMEX: LNG  ) . With a huge glut of natural gas in the U.S. coming from big shale discoveries, Cheniere is trying to take advantage by turning the commodity into an exportable energy source for the rest of the world. But with competitors also seeking to export liquefied natural gas, will Cheniere be able to dominate the industry? Below, I'll take a closer look at what people expect from Cheniere Energy and its rivals.

Forecasts on Cheniere Energy

Median Target Stock Price $16
2012 EPS Estimate ($1.60)
Expected Total Revenue Growth, 2011 to 2015 80%
CAPS Rating (out of 5) **

Sources: Yahoo! Finance and S&P Capital IQ.

Will Cheniere Energy rise in 2012?
Analysts have some high hopes for Cheniere in the long run, with a target price that's almost 50% higher than the stock's current level. Yet they understand that the long-term projects that Cheniere is working on will take time to pan out, so they're projecting losses to persist for several years. Members of our Motley Fool CAPS community aren't very willing to wait, giving it a low two-star rating.

The future for Cheniere hinges on the expansion of its Sabine Pass liquefied natural gas facility. Currently, Sabine Pass accepts LNG for import, but with natural gas prices near decade lows, the prospects for exporting LNG look much more favorable. The company has gotten a commitment from Chesapeake Energy (NYSE: CHK  ) to supply gas and has signed a number of deals with potential buyers for LNG when the facility is ready, but 2015 is probably the earliest that even optimistic investors should expect gas to start to flow -- even assuming the company and its Cheniere Energy Partners (AMEX: CQP  ) subsidiary can line up the necessary financing and permits for the project to go forward.

The other challenge will be making sure there's enough LNG demand to support the project going forward. With a rival project from EnCana (NYSE: ECA  ) , EOG Resources, and Apache planning to serve the Asian market via western Canada, it's all too likely that a glut of LNG could result. Already, InterOil (NYSE: IOC  ) has made a lot of progress on its LNG facility project, which is strategically located in Papua New Guinea -- much closer to key Chinese markets.

The next few years are likely to be difficult for Cheniere shareholders as they wait impatiently for progress reports. Eventually, though, the stock could deliver huge gains if everything goes right for Cheniere.

Cheniere Energy has its future tied to natural gas, but we've got another stock we think is an even more exciting gas play. Join the thousands who've already found out its name and more about the company in the Motley Fool's special free report on natural gas, but don't wait -- get it today.

Click here to add Cheniere Energy to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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