Liquefied Natural Gas Limited (ASX: LNG), Slater & Gordon Limited (ASX: SGH) and Woodside Petroleum Limited (ASX: WPL) are three businesses kicking goals for shareholders. Each, relative to their size, have smashed the returns offered by the S&P/ASX 200 Index (ASX: XJO) (INDEX: ^AXJO) over the past 12 months.
So is it time to take your profits off the table? Or are these stocks destined for bigger gains? Here’s what you need to know.
Liquefied Natural Gas
LNGL has been the ‘story stock’ for 2014, up a whopping 650% so far. That type of gain doesn’t come along often and can be truly life changing for some. Looking back even further however, over the past year, the stock is up an incredible 1,500%. LNGL has transformed from a company with a market capitalisation of less than $100 million to over $1 billion. So what does it do? Well, nothing. Yet.
LNGL, through a US subsidiary called Magnolia LNG has plans to develop a highly lucrative LNG liquefaction export facility in Lake Charles, Louisiana, USA. The proposed 8 million tonnes per annum (mtpa) facility is adjacent to extensive gas pipelines and in the heart of U.S. oil and gas territory. If the company can (and it’s beginning to seem increasingly likely) get the project up and running to its full capacity, it will be capable of driving EBITDA to around $US750 million per annum. What’s more, thanks to its pioneering OSMR liquefaction technology, capex (capital expenditure) and opex (operational expenditure) is likely to be reduced by up to 30%. With a market cap around $1 billion, if they get their plant up and running (it might only get 4 mtpa up and running at first), the current price will seem very reasonable for astute long-term investors.
Slater & Gordon
As Australia’s biggest Personal Injury (PI) law firm, Slater & Gordon has a stable base from which it is leveraging both an international expansion (into the UK) and push into other practice areas. Up 75% in the past 12 months, investors have taken a liking to its three-pronged growth strategy which includes its focus on Personal Legal Services (PLS) here in Australia. With a successful acquisitive and organic growth model, Slater & Gordon is an solid ultra-long-term buy and hold.
Our number one independent oil and gas company has been a quiet achiever of the top-20 Australian public companies, up 20% (not including dividends) in the past year. With a good balance sheet (allowing for ongoing capex spend and/or acquisitive growth), it was pleasing to see Woodside withdraw from the giant (and expensive) Leviathan gas field off the coast of Israel. Although it is getting criticised for having no significant growth prospects, in the coming year management have committed to buying back shares and could pay out a dividend of up 6.4% fully franked. However, trading over $41.50 per share, Woodside looks about fair value.
3 high-risk/high-reward resources companies
In March I highlighted LNG as one of Australia’s best emerging growth stocks on the ASX. It’s since climbed hundreds of percent but could well go higher in the next 10 years. It accounts for around 38% of my personal portfolio and, as a result, I will not be buying more shares anytime soon (although I’m not going to sell any either!).
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Returns as of 6th October 2020
Motley Fool Contributor Owen Raszkiewicz owns shares in Slater & Gordon and Liquefied Natural Gas Limited.
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