Mining company share prices are dragging along the bottom and it's hard to say when they will turn up. Australian investors searching for alternatives to the regular resource stocks like Rio Tinto Limited (ASX: RIO) should be checking out energy stocks.
China might be pulling back on steel making and iron ore and coal imports, but the heavily populated country needs more and more energy. That goes for Japan after the country's nuclear power plants were shut down following the 2011 Fukushima nuclear disaster.
Likewise, Asia's developing countries will require more power and electricity as they grow.
The answer to their needs and something that Australia has a lot of is LNG, liquefied natural gas. It's cleaner than coal and other fossil fuels, so it can cut pollution as well.
Over the next 3 – 4 years, the LNG export market is going to grow immensely. A number of LNG projects will be in starting in the next 12 – 18 months and the companies related to them will see production and earnings expand quickly.
Santos Ltd (ASX: STO) and Oil Search Limited (ASX: OSH) are two energy stocks that will see revenues take off in FY 2015 and beyond.
That's why investors should watch them closely and perhaps add them to their portfolio if they don't have energy stocks already.
Both Santos and Oil Search are connected to the PNG LNG project, which started exporting LNG in May this year. This gives them long-running revenue generation since all of the LNG produced is already under contract with Asian power companies.
Oil Search stated previously that it projects its production output will quadruple by 2016. There are plans to expand the project with extra processing plants for new resources found nearby, so the story is just beginning there.
Santos' stake in the PNG LNG is smaller (13.5% vs Oil Search's 29%), but it is also involved with the separate Queensland-based GLNG project. It's due to begin exporting LNG in mid-2015 and that will drive the company's sales revenues in a step-change up.
Another high growth sector is technology. The amount of expansion and change in computer and internet-related companies is astounding – so are the investing opportunities!
