Water is seemingly everywhere, covering about 70% of our planet. Yet, fresh water is extremely scarce – accounting for a mere 3% of the world’s supply. Of that amount, the vast majority is either locked up in glaciers or reside in inaccessible subterranean pockets.

And the fresh water that is accessible is not evenly distributed around the planet. For example, there is plenty of water in Siberia. But few people live there.

Of the amount of fresh water that is available, roughly 70% of that goes to agriculture to feed the world’s population. The enormous amount of water needed to grow the crops and livestock needed to feed and clothe the world’s growing population is creating a dire global situation.

The U.S. media tends to ignore events in the rest of the world, but there is a scary situation developing in South Africa’s second-largest city, Cape Town, with its four million residents.

Countdown to Day Zero

Cape Town is best known as a tourist haven and the center of South Africa’s wine industry. But now population growth and a record drought in the region have combined to push the city to the brink – to being very close to ‘Day Zero’ when its water reservoirs run dry.

Historically, despite the arid climate, Cape Town’s Table Mountain had trapped onshore breezes coming from warm ocean waters, creating rain locally that powered rivers and filled underground aquifers. But that has not happened the past two years thanks to unusually low rainfall – only 153.5mm (about 6 inches) of rainfall was recorded at Cape Town’s airport in 2017. That compared to more than 500mm in 2014. Climatologists say that another year of drought cannot be ruled out.

Of course, people acting stupid are to blame also. The well-to-do suburbs with water-hungry lawns and swimming pools are not conserving water despite pleas from local government officials. City officials asked residents to consume only 50 liters (about 13 gallons) a day of water, which is less than one-sixth what a typical American family uses.

And it’s not like city officials were sitting on their hands doing nothing… they were proactive. Over the last 20 years, the city made strides in reducing water use from its six major reservoirs, which hold up to 230 billion gallons of water. Per capita consumption declined, the city reduced leaks from water pipes, it forced large users to pay more, and generally promoted water efficiency. Cape Town even won several international water management awards. And currently, they are building their first water desalination plants.

But those efforts have not been enough. In 2014, its six dams were full. But then came three straight years of drought—the worst in more than a century. Now, according to data from NASA satellites, the reservoirs stand at 26% of capacity, with the single largest reservoir (it provides half the city’s water) in the worst shape. City officials plan to cut off the taps when the reservoirs hit 13.5%, which is known as ‘Day Zero’.

Residents of Cape Town are finding out the truth contained in this quote from Benjamin Franklin: “When the well is dry, we know the worth of water.”

Other Major Cities at Risk Too

Up until now, a shutdown of such a major metropolitan city would have been unthinkable. But as over-development, population growth and climate change have changed the balance between water supply and demand, urban centers all over the world may face the threat of severe water shortages.

In other words, other of humankind’s major cities are also at risk of severe water shortages.

Already, many of the 21 million residents of Mexico City only have running water part of the day, while one in five get just a few hours from their taps each week. Several major cities in India don’t have enough as poorer regions cut off the water flowing downstream to the ‘rich’ cities. Water managers in Melbourne, Australia, reported last summer that they could run out of water in about a decade. And Jakarta is actually running so dry that the city is literally sinking as residents suck up groundwater from below the surface.

In 2015, Sao Paolo Brazil faced a crisis similar to Cape Town with only 20 days’ worth of water left in its reservoirs. They were so low that pipes drew in mud instead of water, emergency water trucks were looted and homes only had access to water for a few hours twice a week. Only last-minute rains salvaged the situation there.

In Barcelona, Spain in 2008 tankers full of fresh water from France had to be imported into the city.

The bottom line is that 14 of the world’s 20 megacities are now experiencing water scarcity. And as many as 4 billion people (half of which are located in India and China) are living in areas where there is water stress for at least one month a year, according to a 2016 study in the journal Science Advances.

The Water Investment Opportunity

The current water crisis is driven both by climate and poor water infrastructure. In Jakarta Indonesia, for instance, water management is very poor with unsanitary water, lots of leaky pipes, heavy metals pollution and an inadequate number of pipes.

Even from an economic perspective, water is critical. As Pictet fund manager Arnaud Bisschop told Bloomberg, “There is a 100% correlation between water availability and GDP growth. If there’s no water, there’s no growth.”

That means there needs to be trillions of dollars spent on water and water infrastructure projects around the world in the coming decades. Even here in the U.S., estimates are than a trillion dollars needs to be spent over the next two decades to upgrade our deteriorating water infrastructure.

Water is emerging as an investment class. So much so that the CEO of the French water services firm Suez (OTC: SZEVY), Jean-Louis Chaussade, says it will be more valuable than oil someday. Even if that doesn’t happen, water should be a must-own part of your portfolio.

So how can you invest in water? The broadest way is through an exchange traded fund. There are five such ETFs that are available to you. The one I like the most is the former Guggenheim S&P Global Water Index ETF, which is now controlled by Invesco and is called the PowerShares S&P Global Water Index Portfolio (NYSE: CGW).

This is nicely balanced geographically with about 43% in the U.S. and the rest overseas. However, Wall Street is apparently still unaware of the water problem because this fund gained only 11.5% over the past year.

Its top five positions are all well-known names: American Water Works (NYSE: AWK), Xylem (NYSE: XYL), Danaher (NYSE: DHR), Veolia Environnement SA (OTC: VEOEY) and Pentair PLC (NYSE: PNR). One of these stocks is my top water recommendation and is available to subscribers of my Growth Stock Advisor newsletter. It is up more than 10% since the November 29 recommendation date despite the turbulent stock market we’ve had in 2018. And I expect much more upside in the years ahead due to the water situation globally.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley 

In the latest annual energy outlook from BP PLC (NYSE: BP), it was the first time the company forecast oil demand would eventually peak and then steadily decline. BP put the date for peak oil demand in the late 2030s.

And the cause is one I’ve told you about quite often in my articles – the rise of electric vehicles. BP said there would be 300 million electric vehicles on the road by 2040, up from about 3 million today. BP says electric vehicles will account for only 15% of the roughly 3 billion cars on the road in 2040. But they will account for 30% of all passenger car transportation, as measured by distance traveled, because so many of them will be shared vehicles, à la Uber.

BP’s outlook also envisaged renewable power growing from just 4% of global energy consumption today to 14% in 2040.

Add all of that up and you can surmise that a lot of changes are ahead for the oil industry. Yet only some of the world’s major oil companies are preparing for what the future will hold.

Your Friendly Neighborhood Power Provider

The oil companies that seem to have begun the process of adapting to a lower carbon economy are located across the pond in Europe. These include Royal Dutch Shell PLC (NYSE: RDS.A and NYSE: RDS.B), Total SA (NYSE: TOT) as well as the aforementioned BP. Both Shell and Total, for example, have invested heavily into natural gas as a cleaner alternative to coal for power generation.

But now the two companies are moving forward with even more ambitious plans.

Both Shell and Total are moving into the consumer power market. The reason is obvious to the head of Shell’s “new energy” strategy, Maarten Wetselaar. He forecast that the proportion of global energy consumption to be met by electricity will climb from less than 20% currently to about 50% over the next few decades.

This outlook is largely in agreement with the forecast of BP, which can be seen in the chart below:

Both companies have also moved into renewable energy. In January, Shell bought a 44% stake in the U.S. solar energy company, Silicon Ranch Corporation, for $217 million. And last October, it purchased NewMotion, which operates one of Europe’s largest electric vehicle charging networks. The company also has a 20% stake in the huge Borssele offshore wind project off the coast of Holland.

Total’s strategy is similar. It paid nearly $300 million for a 23% stake in the French renewable energy company, Eren. It also spent $2 billion (about a billion each) over the past few years buying the U.S. solar company, SunPower, and the French battery developer Saft. The latter makes specialized long-life lithium-ion batteries for industries including telecommunications, medicine, aerospace and defense. Its products are installed in two-thirds of the world’s commercial aircraft and over 200 satellites.

The management at both companies acknowledge that the global energy market – long dominated by oil – is beginning to give way to a lower-carbon system, with much larger future roles for natural gas and renewable power. And both companies are already laying the foundation for such a future by moving into the selling of power…

Shell is close to completing its acquisition of First Utility, the UK electricity and gas supplier, which it agreed to buy last December in a deal that will pit it against the U.K. ‘s larger power suppliers. Meanwhile, Total is in the early stages of building a retail energy business in its domestic French market to challenge the country’s incumbent power providers.

These acquisitions are all part of the long-term strategy of these companies. It’s a rather straightforward strategy too – to sell the power from their own renewable and other energy sources (such as natural gas) through their energy trading businesses to customers, both commercial and to a lesser extent, residential.

Shell, for instance, already is among the largest power traders in both Europe and North America. And given its size and scope, it may become a supplier of choice for many large industrial customers, threatening the long-term viability of existing utilities.

Related: Dump These Energy Stocks Before the Next Correction

What the Other Oil Companies Are Doing

Most of the other major European oil firms are moving down the same path as Shell and Total, albeit at a slower pace. BP has owned a large U.S. wind business for many years and in December signed a $200 million deal to buy Lightsource, a U.K. solar power developer. Even Italy’s Eni SpA (NYSE: E) and Norway’s Statoil ASA (NYSE: STO) are investing in solar and offshore wind, respectively.

Yet the two U.S. giants – ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) – have largely not followed their European peers into other forms of energy besides oil. They seem content being dinosaurs drawing jeers from climate activists.

Exxon and Chevron are ignoring the eventual transition to a lower carbon world. No one knows how fast this transition will occur. But one thing is all but certain: electricity will be at the heart of the shift with power demand increasing in transportation, industry and the services sector as oil is displaced.

If you want to invest in oil stocks, I would completely avoid the U.S. majors and stick with the European majors where management seems more willing to diversify. As Mr. Wetselaar of Shell was quoted by the Financial Times, “Electrification… is going to be the story of the next decades. We want to not just be part of it; we want to become a leader.”

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley

basic truth in life is that, if it sounds too good to be true, it usually isn’t all it’s cracked up to be. The same applies to investing. You have probably heard how great the tax cut will be for companies across the board. Well, ‘warts’ are already appearing on the tax cut front.

In an earlier article I on taxes I wrote: “Will the airlines just use the [tax] windfall to launch into another round of airfare wars? (See article here.) The industry has squandered windfalls in the past, such as from plunging oil prices.”

Based on the recent earnings call from United Continental Holdings (NYSE: UAL), it looks like another airfare price war is just around the corner.

The Airlines Never Learn

UAL’s management said it plans to increase available seat miles over the next three years by 4% to 6% per year. That compares to a 3.5% rise in 2017 and only a 1.4% rise in 2016. That sounds a lot like previous mistakes of expanding too much too quickly and then being forced to slash ticket prices.

Other airlines, of course, would respond in kind and another price war would be underway. Adding to the concerns about the industry, UAL’s management also seemed to signal a willingness to take on low-cost carriers on a price basis.

So forget about anything you may have heard about the benefits of the tax cuts for the airline industry.

Yes, the benefits are real. But it looks like, once again, that the industry will squander the benefits as it did when oil prices fell steeply. Until it becomes clear whether the airline industry will go down the path of another price war, I would avoid them and in particular, United Continental.

This should just bring home the point to you that you have should never base an investment decision solely on tax or other government policies.

While the airlines seem to be fumbling an opportunity to prosper, what really caught my eye regarding the new tax law is the potential perverse effect it will have on the prospects for technology companies repatriating their overseas assets (some cash, but mainly bonds).

Will Repatriation Happen?

Apple (Nasdaq: AAPL) garnered a lot of headlines recently when it said it would make a one-off $38 billion tax payment on the repatriation of some of its overseas profits. That led to speculation by the Trump Administration and others about how other technology companies would follow Apple’s lead.

But some tax experts say it may not happen. They point to parts of the legislation that could end up having the direct opposite effect, leading firms to shift more of their assets (and jobs) offshore.

A law professor at the University of Southern California, Ed Kleibard, told the Financial Times “The bill is biased in favor of offshore real investment.” In other words, companies may perversely be encouraged to build plants overseas, creating jobs there. Let me explain…

There is a new tax on any overseas profits above a fixed, tax-free return that companies will be allowed to earn on their tangible assets, such as plant and equipment. This is known as the GILTI (global intangible low-tax income) tax and it is aimed at taxing excess profits from intangibles, such as a technology company’s or pharmaceutical company’s patents and intellectual properties. Thanks to technology, the share of many companies’ assets that are intangible has grown a lot in recent years.

However, the GILTI tax rate is only half the new U.S. corporate tax rate. And companies can take a credit for any foreign taxes paid on this tax. This may encourage firms to keep as much of their profits in tax havens as they can, lowering their overall foreign taxes to a level where they can fully offset the minimal GILTI tax.

And here’s where it touches on the earlier point I made about real overseas investments. A law professor at the University of Pennsylvania, Chris Sanchirico explained to the Financial Times that all sorts of multinationals will have an incentive to add to their offshore facilities like factories (and the linked jobs), since such action will boost their tangible assets outside the United States, therefore sheltering even more of their profits from tax.

The likely result of all these new tax ‘games’ that will be played by the big multinationals? Likely hundreds of billions of dollars will remain ‘trapped’ outside the U.S.

What It Means to You

As far as investment implications goes, I think it means you should stick to investing in the large U.S. multinational companies. These same companies are already enjoying the benefits of a much weaker U.S. dollar that the Trump Administration is encouraging.

One prime example is Microsoft (Nasdaq: MSFT). In early December, its stock was down to $81 over worries about the tax bill. Now it is over $92 a share and still climbing. There are lots of reasons why, but I’m sure Wall Street has by now realized the new tax law won’t hurt Microsoft. Again, never make an investment decision solely on something like taxes.

In Microsoft’s case, I much prefer concentrating on its efforts in the cloud, artificial intelligence and quantum computing. For more on Microsoft and quantum computing, stay tuned for my next.

One other investment for you to consider is the WisdomTree U.S. Export and Multinational Fund (NYSE: WEXP). It is filled with blue-chip U.S. multinationals such as Microsoft, Boeing, Johnson & Johnson, Apple and Alphabet.

This ETF is up 21% over the past year and I would expect this type of performance to continue as long as the dollar tailwind and other macro factors (including taxes) continue to be favorable.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley

The cut in the U.S. corporate tax rate from 35% to 21% is supposed to do everything from juicing the U.S. economy to levels not seen in decades to enriching both shareholders and consumers alike. But the reality is likely to be quite different.

The first thing it will bring is a muddied fourth quarter earnings season for investors. A one-time tax on accumulated offshore earnings and revaluations of deferred taxes, based on the new rate, means a lot of potential charges and writeoffs for multinational companies. For firms that report only GAAP earnings, the headline impact on earnings could be quite large.

Investors should look through these one-off charges and focus on what the long-term effects will be on the companies they are invested in.

While many on Wall Street make proclamations about the benefits of the corporate tax cut for banks, I believe the sector still faces too many headwinds (like continuing low interest rates) for me to be interested in investing into banks. Instead, I’d rather focus on three other sectors – with still relatively low valuations – that should benefit from the changes in the tax law regarding U.S. corporations.

Airlines to Fly High

One of the biggest beneficiaries of the tax cut is the U.S. airline industry. Since most of their income is taxed domestically, the lowering of the tax rate to 21% from mostly in the mid-30s%, is a big deal.

Take Delta Air Lines (NYSE: DAL), for example. Just last week it said that the tax cut will boost its earnings by about $800 million a year. That translates to about $1 per share in increased earnings for 2018. Delta management raised their earnings per share guidance for 2018 to a range of $6.35 to $6.70, up 20% to 30% from the year earlier level.

Delta, like many U.S. airlines, pays no cash taxes. However, Delta expects it will become a cash taxpayer in 2019 and 2020, so the lower rate will be a boon.

The tax cut is a bit of icing on the cake for Delta, which is doing very well currently. In the latest quarter, it reported an 8.3% revenue rise to $10.2 billion, which beat market expectations. Passenger unit revenue (PRASM) increased 4.2% in the quarter as Delta regained some of its pricing power following a nasty airfare war.

That’s the danger for the airline industry and the tax cut. Will the airlines just use the windfall to launch into another round of airfare wars? The industry has squandered windfalls in the past, such as from plunging oil prices.

Oil Company Tax Gusher

Speaking of oil, the oil industry should be another beneficiary of the changes in tax law. According to Bloomberg, it pays the second-highest effective tax rate of any sector – 37%. So a drop to 21% is an obvious boost.

Other tax perks for the industry were left in place. For instance, the century-old tax treatment of allowing oil companies to expense intangible drilling costs was retained. As was another century-old treatment that affects small independent companies and royalty owners – the percentage depletion deduction.

A new provision allowing businesses to expense the full cost of new investments in certain plant and equipment for the next five years will give a boost to many in this capital-intensive industry. Giants like Chevron have an $18.3 billion capital and exploration budget in 2018 and ExxonMobil has an even bigger $22 billion budget.

And it’s not just the big oil firms to benefit. The oil refining segment should really get a major boost. The largest company in the segment, by market capitalization, Phillips 66 (NYSE: PSX), will receive a 16% boost to 2018 earnings according to an estimate from Piper Jaffray’s Simmons & Company energy investment bank unit.

Phillips 66 is a leading player in each of the segments it operates in: refining, chemicals and midstream.  The company will invest $2-$3 billion in capital investments this year. Yet, it still increases payouts to shareholders on a regular basis.

Retail Rebound

The third sector to look for benefits from the tax cut is retail. The tax cuts should give them a respite from being Amazoned out of existence, thanks to a soon-to-be increased cash flow. This holds true for the vast majority of retailers whose operations are domestically based. Wall Street analysts believe the average retailer will get a 15% earnings boost from the changes in the tax law.

One of my favorites in the sector is Ulta Beauty (Nasdaq: ULTA), which operates 1,058 stores and generated $4.8 billion in revenues in 2016. It should get a double boost – not only from the tax cut itself, but from consumers with a little extra in their pocket spending on simple luxuries like makeup, lip gloss, etc. Perhaps that’s why the stock is already up over 6% year-to-date.

Hopefully, the tax cuts will reinvigorate this once ultra-high growth company. Especially since parts of the company are still growing fast… e-commerce sales in its latest quarter did soar by nearly 63%. Management has forecast sales growth for 2018 in the 10% to 11% range.

Bottom line for you – the number one item to remember regarding the tax cut is that, like all three companies I spoke about in the article, it will boost domestically-focused companies much more than it does multinational companies. Of course, multinationals have other things going for them, such as a weak U.S. dollar.

Here are other important points to keep in mind regarding the tax cut: Even for companies within a sector that will generally receive a boost from the tax cut, some companies will benefit more than its competitors. So before investing, make sure to do your due diligence to see whether a company will really get a big bump from the change in corporate taxes.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley 

One of the main messages I give you in my articles is that you have to pay attention to global events to find the best investment opportunities before Wall Street does.

Another great example of that occurred in March at China’s annual parliamentary meeting. The one main takeaway from that meeting could be summed up by one sentence that was repeated again and again at the meeting – “We will make our skies blue again.”

The Chinese are (finally) very serious about curbing the rampant pollution in their country. This has boosted industrial metals prices globally as China curbs output of aluminum and steel in the country.

And China has cut back on the use of coal for both power and heating purposes. As a substitute for coal, the Chinese government is placing a major emphasis on natural gas.

Therein lies the opportunity…

China’s LNG Imports

While China does produce some of its own natural gas and imports more gas from Russia via pipelines, the all-of-a-sudden big increase in natural gas demand has had almost immediate effects.

In early December, that demand pushed LNG (liquified natural gas) prices in Asia to a three-year high, 20% higher than a year ago – and up 80% from the 2017 low – at above $10 per million BTU. According to energy consultants Wood Mackenzie, import volumes of LNG were 48% higher in the first ten months of 2017. This follows a 25% jump the year before.

A cold winter in northern China raised demand even more and made authorities desperate to meet the need. In December, Chinese oil company CNOOC (NYSE: CEO) was forced to hire over 100 LNG-carrying trucks to bring LNG over 1,300 miles from the south of China, where the LNG import facilities are, to the northern parts of the country where the cold of winter was biting hard.

And while prices have fallen somewhat since with a January thaw, this trend toward higher LNG demand from China is a feature of the energy market that will be with us for many years.

In an interesting side note for natural gas, there is talk in the market that energy kingpin Saudi Arabia may (in the relatively near future) have to import natural gas in the form of LNG in order to meet domestic needs. Demand there has risen by 50% over the past decade while proven Saudi gas reserves have only risen by 20%.

To that end, it is believed Saudi Arabia is interested in funding LNG projects around the world. Are President Trump and U.S. gas producers listening? I hope they are.

US LNG Exporters

Especially since U.S. capacity to process LNG is set to grow nearly seven-fold by 2019 as five export terminals open.

Primary among U.S. LNG exporters is Cheniere Energy (NYSE: LNG), which is the owner of the first LNG export terminal in the U.S. that has been operating since early 2016. It is exporting at its Sabine Pass facility with three trains and a capacity of about two billion cubic feet of gas per day. Its total capacity is expected to be about five billion cubic feet per day once all five trains are completed (the fourth train was recently completed). An LNG train is a liquified natural gas plant’s liquefaction and purification facility.

Chiniere’s first mover advantage is evident. In November, it signed an $11 billion memorandum of understanding for long-term LNG sales with China National Petroleum Corporation. CNPC is the parent of PetroChina (NYSE: PTR).

However, competition for Cheniere is underway here in the U.S. There are five other facilities, in addition to Cheniere’s, that will add roughly 7.5 billion cubic feet of LNG export capacity in 2018 and 2019. Here is the list of these facilities for you:

Cove Point, Maryland terminal just started operating in December and is owned by Dominion Energy (NYSE: D). It used to be an import terminal that was retooled as an export terminal with a capacity of 0.82 billion cubic feet per day.

Cameron LNG, Louisiana is owned by Sempra Energy (NYSE: SRE) and is scheduled to begin operation in 2018. It has three trains currently under construction with the first train expected to begin operation in early 2018, and the second and third trains are expected to start up during the second half of 2018. The three trains will have a capacity of 2.1 billion cubic feet per day.

Sempra Energy is also in the permitting stage of constructing an expansion to the facility, which would add a fourth and fifth train. Project completion for the expansion is expected sometime in 2019.

Elba Island, Georgia is a relatively small-scale facility owned by Kinder Morgan (NYSE: KMI) with a capacity of 0.35 billion cubic feet per day. It was originally constructed as a regasification plant for imports of LNG and it is being retooled as an export facility. The project will use ten small scale liquefaction units, constructed in two phases. The first phase will begin service in mid-2018, while the second will come online in early 2019.

Freeport LNG, Texas has three trains currently under construction. It will begin operation between the end of 2018 and the third quarter of 2019, with a combined capacity of 2.14 billion cubic feet per day. A fourth train is under development.

Corpus Christi, Texas is currently under construction on 1,000 acres controlled by Cheniere Energy. It is being designed for five trains and construction on the first and second trains began in May 2015 and is now about 70% complete. The first train is expected to begin operating in the first half of 2019 with the first three trains having a combined capacity of 2.14 billion cubic feet per day.

While I do like Cheniere Energy, there are lots of LNG projects coming online in China’s neighborhood – namely Australia. So instead of focusing on just LNG exporters, I am also looking at the carriers of all that LNG to China – the LNG shipping companies.

LNG Shipping Companies

These companies are in the sweet spot between rising Chinese demand for LNG and limited supplies of ships. Transporting LNG requires specialized tankers and the market for these tankers has completely flipped. From a glut a few years ago, there is now a shortage of these specialized tankers.

This shortage has led to a doubling of LNG tanker rates since April 2016. And there is definitely room for further increases. Prices could double again and still not reach the highs set five years ago.

The LNG carrier shortage will not be alleviated quickly either since it takes about 30 months to build such a vessel. Between 2012 and 2014, there were orders for 66 LNG carriers. But with that aforementioned glut, orders dropped to only eight in 2017.

This will obviously benefit the companies that currently own LNG tankers. But be careful here – many of them are heavily loaded with debt. Here are two companies though I am looking at:

Golar LNG (Nasdaq: GLNG) – its stock is up nearly 20% over the past year. The company is one of the world’s largest independent owners and operators of marine-based LNG midstream infrastructure and is involved in the liquefaction, transportation and regasification of natural gas.

Related: A Top 10% Yield Stock to Own for Growth and Income

In others words, Golar is no mere LNG shipper, although it has 16 LNG shipping vessels. It is also focused on other aspects of the LNG pipeline including floating LNG liquefaction (FLNG) and floating storage and regasification units (FSRUs). It is the first company to convert ships into FSRUs and FLNGVs (floating liquefied natural gas vessel). This sets it apart from most of its competitors.

If you are looking at more of a pure-play LNG shipper, there is Gaslog Ltd. (NYSE: GLOG), whose stock is up nearly 30% over the last year, with most that gain occurring in the last three months.

Its fleet consists of 22 LNG ships on the water with another five ships on order being built. And like Golar, it is also becoming involved with FSRUs.

However, I like Gaslog because it is one of those carriers, along with Teekay LNG Partners L.P. (NYSE: TGP), that is greatly benefiting from the diversion of more and more LNG tankers to China. The daily rate of a 160,000 cubic meter LNG tanker soared to $80,000 in December from the 2017 low of $30,000 in April, according to ship broker Clarkson.

The third quarter of 2017 for Gaslog already saw record revenue and EBITDA. And thanks to Chinese demand, this should continue for the foreseeable future.

If you are looking more for income than capital gains, but still want to participate in the China LNG story, consider limited partnerships from the shipping firms.

Gaslog has a limited partnership worth a look, Gaslog Partners LP (NYSE: GLOP), which is up 5.77% over the past three months with a current yield of 8.36%.  And there is also the aforementioned Teekay LNG. It has risen nearly 13% over the past three months and has a 2.71% yield. Teekay will be receiving 11 new LNG vessels by the end of 2018.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley