Q: Hello 5-i,
What is the concencus on natural gas prices over the next year or so.WIth the completion of the LNG pipeline to the Pacific, companies such as this one ought to benefit from more demand ,therefore a higher price for nat.gaz.Is this a good time to accumulate the stock?
many thanks,
Jean
What is the concencus on natural gas prices over the next year or so.WIth the completion of the LNG pipeline to the Pacific, companies such as this one ought to benefit from more demand ,therefore a higher price for nat.gaz.Is this a good time to accumulate the stock?
many thanks,
Jean
5i Research Answer:
We feel the outlook for natural gas in the coming year is met with moderate growth, and potential lots of volatility. Underlying global natural gas demand should increase, and the completion of Canada's LNG pipeline to the Pacific could improve ARX's profitability. Its recent momentum has been positive, and it offers a decent yield (2.7%) with a solid valuation of 10.5X forward earnings. Growth is expected to be decent in the coming years, and its profit margins are healthy. We think it looks OK here, although, it is expected to be volatile and it needs to resume its topline growth. For an investor that is bullish on the outlook for natural gas, we would be OK accumulating here.