Today’s recommendation is a global engineering, construction, and services company in the rapidly-growing LNG and CNG markets.
KBR Inc. (KBR)
from Unconventional Wealth
Over the past 30 years, KBR (KBR) has constructed more than half of the world’s natural gas production capacity, in more than 70 countries. KBR is responsible for many firsts—from the first gas-powered turbine power plants to the first liquefied natural gas (LNG) facilities on numerous continents.
And since LNG is the fastest-growing segment of the energy market—with demand increasing 140% since 2000—there is plenty of business ahead for KBR. But it hasn’t stopped with LNG, either. It’s leading the way on compressed natural gas (CNG) as well—and has even pioneered methods to create pure diesel fuel out of natural gas.
There’s just no other way to put this: KBR is, far and away, the world leader when it comes to LNG and other gas-to-liquid technologies. As natural gas takes a larger and larger role in our energy infrastructure, KBR will only gain importance.
It already counts many governments—local, state and national—among its client list. And it boasts a strong management team as well.
The company has almost no debt and nearly $1 billion in cash sitting on its ledgers. Not bad for a company with a market cap under $5 billion. As if all that weren’t enough, it’s cheap too. With a forward P/E just a hair over 10 and a price-to-sales ratio well under 1, share prices are in a good position to advance even if natural gas consumption did nothing.
But it’s not doing nothing. Natural gas consumption going parabolic. It’s fast threatening petroleum for energy pre-eminence. There’s no safer natural gas play out there. And best
of all, natural gas prices can remain low. Doesn’t matter. KBR gets paid for processing the stuff, not digging it up. Low prices only increase consumption—which increases KBR’s bottom line.
This is one of my favorite plays in the markets today.
Ryan Cole, Unconventional Wealth, www.contrarianprofits.com, 888-811-9492, February 2014