Liquid natural gas is booming as Asia looks for alternatives to coal. These stocks could surge

The LNG (Liquified Natural Gas) Tanker FSRU Toscana arrives at the French Mediterranean port of Marseille.

Liquid natural gas is becoming a hot global commodity as China and India seek alternatives to coal and Europe turns its back on Russian energy due to the war in Ukraine.

Global LNG demand is expected to grow 5% annually through 2034, according to a report published by Stifel Financial this week. By 2030, demand worldwide is forecast to reach 596 million metric tons, a 47% increase over 401 million metric tons in 2023.

LNG demand has grown five times faster than oil over the past 20 years, according to the 90-page report. It is viewed as a “bridge fuel” between fossil fuels and renewables because it burns cleaner than coal and crude oil.

Stifel recommends Cheniere, Chart Industries and Golar LNG as companies poised to grow as they build out LNG infrastructure to meet rising demand.

Chart manufactures plants that cool natural gas into a liquid and warms it back into a gas after delivery. Based in Georgia, Chart could see high single-digit to low double-digit annual revenue growth over the next decade by providing “picks and shovels” to build out the LNG supply chain, according to Stifel.

The investment bank has a price target of $199 for Chart, implying 71% upside from Tuesday’s close of $116.48 per share. So far this year, Chart has fallen about 15%.

Chart stock price chart.

Cheniere is an LNG export powerhouse with 45 million metric tons of annual capacity, representing 48% of the U.S total. The Houston-based company is planning to increase its LNG capacity to 75 million metric tons by 2031.

Stifel has a stock price target of $204 on Cheniere, indicating about 11% upside from Tuesday’s close of $183.07 per share. Cheniere has gained 7% this year and 15% over the past three months.

Cheniere stock price chart.

Golar manufactures floating LNG facilities, essentially one-stop shops where natural gas is extracted, turned into a liquid and picked up by ships for delivery. The company has two operational units in Cameroon and Senegal with a total capacity of 5 million metric tons per year.

Stifel’s price target for Golar is $53 per share, suggesting 63% upside from Tuesday’s close of $32.61 per share. Golar’s stock has risen 42% this year, though shares have pulled back almost 7% this month.

Golar LNG shares have outperformed the sector and the market in 2024.

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