CNBC’s Jim Cramer on Friday advised investors to buy stock of Excelerate Energy while it’s a steal.
“The stock’s a bit cheaper than Cheniere Energy, which is the king of LNG exports here in the U.S., at least when you judge them based on last year’s earnings before interest, taxes, depreciation and amortization. … Valuation seems reasonable to me,” the “Mad Money” host said.
“If you’re looking for a way to participate in the rise of liquefied natural gas, which you should, I think Excelerate Energy’s a great way to play it, especially now that the stock has pulled back from its highs,” he added.
Shares of Excelerate Energy rose 2.02% on Friday but reached a new 52-week low earlier in the day.
Cramer said that he likes the company because it’s a LNG play during a time when “the rest of the world is desperate to import liquefied natural gas from the United States.” He also highlighted the company’s solid financials.
“Excelerate’s got terrific margins. Their EBITDA margin came in at 29.5% last year — I think the EBITDA margin is the right one to watch because it’s a very capital intensive business, so it’s important to back out the financial hit they take from the on-paper depreciation of their floating LNG terminals,” he said, also mentioning the company’s profitability.
However, Cramer also highlighted some downsides of the company, including that it’s a controlled company with founder George Kaiser holding 77% of the voting power.
Excelerate is also not a direct play on U.S. liquified natural gas exports, Cramer added.
“However, as more and more countries strike deals to buy American natural gas, they’re going to need infrastructure to unload those shipments. And that’s where Excelerate comes in,” he said.
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