Stocks ticked higher in early trading on the heels of positive quarterly releases from mega-caps Apple (AAPL) and Amazon (AMZN). Strong earnings results from prominent companies have boosted stocks into the close of the month, with the major averages stacking on solid gains. Before the opening bell, the Dow was up nearly 2% for the week, while the S&P 500 and the Nasdaq were up 2.8%. Wall Street was also on pace for strong monthly gains, kicking off the final session of July. The S&P 500 has so far stacked on 7.5% this month, while the Dow has gained more than 5%. Although still in a bear market, the Nasdaq composite is up more than 10% for the month.
The growing demand for electric power through clean energy sources should propel global liquefied natural gas (LNG) market expansion over the coming years. The market was valued at $109.48 billion in 2021 and is expected to climb at a compound annual growth rate (CAGR) of 8.1% from 2022 to 2030. Today we’re highlighting a mighty mid-cap that’s on track for decades-long expansion with a boost from near-term tailwinds to boot as demand for LNG increases worldwide.
Analysts expect a torrid pace of profit growth over the next few years for Chart Industries (GTLS), which manufactures cryogenic equipment for industrial gasses such as liquefied natural gas (LNG). Indeed, the Street forecasts compound annual EPS growth of more than 34% over the next three to five years.
In the near term, the company is benefitting from the growing demand for LNG caused by Russia’s invasion of Ukraine. Geopolitical turmoil helped GTLS gain 16% for the year to date, outperforming the large-cap Dow Jones Industrial Average, which has lost 11% in the same period.
Zooming out, LNG gives long-term-minded GTLS investors exposure to the global secular trend toward sustainable energy. Analysts say the company’s unique portfolio of technologies gives it an edge in the growing industry. BTIG analyst Gregory Lewis says the company is “threading the needle” and “expanding into the right places at the right time” by balancing its core industrial gas business and energy transition exposure with bolt-ons and partnerships across hydrogen, and carbon capture, water treatment, and specialty gasses.
“Chart offers multi-pronged, highly attractive and direct exposure to the energy transition with its core base of industrial gasses and LNG-related products,” Read writes. The analyst believes the company is “among the leaders in providing critical equipment and supplies for the rapidly expanding hydrogen and CCUS rollouts during the 2020s and likely well beyond.” The analyst recognizes both the short- and medium-term valuations “appear stretched by conventional metrics,” he thinks elevated multiples are appropriate given that its “key markets are on track to more than quintuple by the end of the decade.”
Before the opening bell today, Chart reported Q2 results that surpassed Wall Street expectations for both earnings and revenue. The company reported revenue of $404.8 million in the period where analysts expected $391.2 million. Earnings per share came in at $0.88, surpassing analyst estimates of $0.81 by nearly 10%. The company expects continued strength for the rest of the year. Management predicts full-year earnings in the range of $5.20 to $5.60 per share, with revenue in the range of $1.73 billion to $1.8 billion.
Most of the pros on Wall Street agree that this energy transition stock is a Buy now. Of 18 analysts offering recommendations for Chart Industries, 14 rate the stock a Buy, and 4 call it a Hold. There are no Sell ratings for the stock. A median price target of $205 represents a 16% upside from Friday’s opening price.
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