How many current S&P/ASX 200 (INDEXASX: XJO) stocks can you name which have risen more than 850% in 2014?
Liquefied Natural Gas Limited (ASX: LNG) ("LNGL") is the only one I can think of (probably because I own it).
LNGL hopes to be – if it can complete its North American Magnolia and Bear Head export facilities – in the business of turning gas into LNG for shipping.
Some believe LNGL is following in the footsteps of US tolling powerhouse Cheniere Energy, Inc. (NYSE: LNG). Indeed, it seems everything is going according to plan.
Our own LNGL was recently admitted into the ASX's top 200 companies, following a spectacular rise in its share price throughout 2014. At times, it was up more than 1,400%.
However, like other junior resources stocks whose share prices have risen dramatically in a short period of time, such as Syrah Resources Ltd (ASX: SYR) and Sirius Resources N.L. (ASX: SIR), LNGL's spectacular rise has been countered by a significant selloff over the past month.
With the stock down 34% since October 17, all the Johnny-come-latelies would be bitterly disappointed.
So has LNGL's share price finally run out of… well… gas? It's certainly possible. Especially with the oil price falling from over $US105 per barrel to below $US85 per barrel.
However I believe there are more compelling reasons to think, it hasn't.
Sure, falling commodity prices may affect its ability to entice its large energy producers into binding tolling agreements, which will be needed to form a bankable contract to fund construction. But this risk is somewhat mitigated because LNGL's Magnolia facility in Louisiana is not dependent on just one gas producer.
Buy, hold or sell?
LNGL is a high-risk/high-reward investment opportunity. If the company can execute on its plans to build two tolling facilities (Bear Head and Magnolia) then, in the long term, it will prove extremely cheap at today's prices. Even if the upside potential has somewhat diminished for new investors. As such, I'll continue to hold my remaining shares for the long term to see what plays out.
