What to buy now

Energy giant Shell (LSE: SHEL) is the seventh-largest producer of natural gas. However, it has ambitious plans to increase production of gas while reducing its oil output, believing oil to be a declining sector. It is also putting money into liquefied natural gas (LNG), with 18 carriers and 65 chartered vessels, which jointly comprise 11% of the global LNG shipping fleet. The stock is on a 2024 price/earnings (p/e) ratio of seven and yields 4.2%.

Norwegian energy giant Equinor (Oslo: EQNR) is Europe’s second-biggest producer of natural gas, with a large number of fields in development. In an attempt to reduce its carbon emissions it is investing large sums of money in carbon capture and storage, most notably the Northern Lights project.

This aims to store carbon emissions from onshore industries in a terminal on the Norwegian west coast, and then inject it 2.5 kilometres below the sea bed. Equinor trades on a 2024 p/e of 6.7 and offers a dividend yield of 8.2% (which is more than covered by its earnings).

Another energy giant worth investing in is TotalEnergies (Paris: TTE). Total “is well positioned to benefit from the switch from delivering natural gas via pipeline to transporting it through LNG”, as it has made large investments in this area, says Dominic Whittome of Prospect Law.

It is now one of the top three LNG sellers in the world. Even though Total’s revenue grew by 75% from 2017 to 2022, and its earnings per share jumped by 350% during the same period, it still only trades at 6.7 times 2024 earnings and comes with a dividend yield of 5.2%.

A purer play on the rise of LNG is through the US natural gas producer Cheniere Energy (NYSE: LNG). The group was originally set up to import LNG into the US. But now, thanks to America’s shale gas boom, it buys gas from local producers, liquefies it, and then exports it to 30 countries on five continents. It is currently the largest LNG producer in the US, and the second biggest globally. Since 2017 sales have risen nearly sixfold and profits have soared by 1,350%. Cheniere Energy trades at a 2024 p/e of 12.5.

Another way to benefit from the boom in LNG is Excelerate Energy (NYSE: EE). Excelerate owns a portfolio of ten floating storage regasification units, ships that store and transport LNG and also turn it back into a gas, as well as three flexible integrated terminals (E-FIT) that facilitate the import of LNG.

It also works on building terminals and LNG infrastructure for third parties, with a presence around the world, from Brazil to Germany. Although its earnings per share have doubled since 2019, with sales nearly quadrupling, the stock still trades at only 18.5 times 2024 earnings.

Golar LNG (Nasdaq: GLNG) is another company that designs, builds, owns and operates infrastructure to turn natural gas into LNG, and then back into gas again. It is currently focusing its operations on floating LNG facilities that allow gas produced by offshore rigs to be changed into liquid form. One for value investors, it currently trades at only 7.7 times expected 2024 earnings, and is priced at a discount of 5% to its tangible assets.