Forget Woodside Petroleum Limited (ASX: WPL), BHP Billiton (ASX: BHP), Oil Search (ASX: OSH) or Rio Tinto Limited (ASX: RIO), there’s another Australian resources stock stealing the limelight. It appears its share price may have a rocket strapped to it because it’s going skyward at a rapid pace.
The stock I’m speaking of is Liquefied Natural Gas Limited (ASX: LNG) (“LNGL”), a $600 million US LNG play with enormous potential. Yesterday it closed at $1.73, up an outstanding 30% in one day!
This compares to a 0.3% drop from the S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO).
As some readers may already know, the company has been a favourite of many writers here at The Motley Fool Australia. In March, I made it my top stock for new money and since then the share price is up 440%. So far in 2014 it’s up more than 460%!
So who is LNGL?
For those who aren’t aware, LNGL has plans to be involved in the liquefaction of LNG through its gas export facility, named Magnolia, in the U.S. state of Louisiana. It hopes to have all the necessary commercial and regulatory approvals, and plant construction completed by 2018. The proposed 8 million tonnes per annum facility will provide a crucial service for major tolling partners such as AES Latin America, Gunvor, Gas Natural and LNG Holdings.
By mid-2015 management hope to reach financial close and begin construction shortly thereafter. If they can get the project off the ground, the rewards could be immense. By looking at similar companies who’ve gone before it, analysts believe LNGL’s value could leap into the billions of dollars, with the market currently ascribing a value of $500 million, per million tonnes, of LNG throughput.
Can it continue?
As a shareholder in LNGL, I hope it can. Even though I recently doubted its run could continue. The price falls it lately encountered appear to have been only temporary. However the huge gains are still the one thing I’d certainly be concerned about, if I were to consider buying in today. Predicting short-term market fluctuations is a mug’s game but the fear of missing out can cost well-intentioned investors dearly.
Motley Fool Contributor Owen Raszkiewicz owns shares in Liquefied Natural Gas Limited.
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