The presidential election is just under a week away – and few sectors are attracting more political noise than energy. Our advice: Tune out as much of the heated rhetoric and breathless campaign promises as you can. Stay focused on what’s important to investment returns. Two names that could prosper no matter who wins are New Fortress Energy Inc. (NFE) and Energy Transfer LP (ET), writes Elliott Gue, editor of Energy and Income Advisor.
We believe it makes sense to build positions in the companies likely to profit the most from this still-very-much-unfolding energy price cycle. Earlier this month, we presented at the MoneyShow Orlando with a basic message: Energy is a growth industry with peak demand nowhere in sight.
This is an “all of the above world,” where no one energy source is perfect, but almost all are set to grow rapidly for years to come. That’s worth keeping in mind as popular investment media fixates on trying to pick winners and losers, based on election forecasts that at this point amount to little more than guesswork.
That said, there is one group of energy companies we think will pick up steam either way: Those developing and operating LNG export facilities, along with related natural gas production and needed infrastructure like pipelines and gathering systems.
The Biden Administration has already resumed approvals of LNG export licenses, starting with NFE’s Altamira facility in Mexico. That project needed US government approval because US gas pipelines feed it. And now, ET is reportedly near an arrangement for a proposed LNG export facility in Louisiana.
This unfreezing of permits for LNG development would likely accelerate under a prospective Trump Administration. But no matter who wins the election, expansion of US natural gas exports appears to be getting back on track. That’s creating opportunity for system expansion and earnings growth at a time when producers are still very wary of investing heavily in output — and midstream and downstream companies are restraining their expansion for that reason.
Recommended Action: Buy NFE and ET.
