By Nigam Arora & Dr. Natasha Arora
Signal(s) to enter, add, reduce, exit, hold or change.
Multi-Bagger Stock
Tellurian (TELL) is potentially a multi-bagger stock. The base case is over 800% return. In some scenarios, the potential return can be much higher.
High Demand
Europe used to rely on cheap natural gas from Russia. Now Russia has cut off gas supplies to Europe in retaliation for sanctions against Russia stemming from the Ukraine invasion.
Europe is looking for new sources of gas.
The United States has an excess supply of natural gas.
The US wants to help Europe by shipping as much natural gas to Europe as possible.
The Road Block
Natural gas within the US is transported via pipelines.
There are no pipelines from the US to Europe.
The solution is to liquefy natural gas and ship it on specialized ships. Liquifying natural gas in large quantities is a complex and expensive process.
The Opportunity
Tellurian wants to capture the opportunity and is building a production and export terminal in Louisiana. When completed, the terminal will be able to export 27 million tonnes of liquified natural gas per year.
Financing
It takes billions of dollars to build a liquified natural gas terminal. Previously Tellurian announced that it had wanted to sell units of 🔒 (To see the locked content, please take a 30 day free trial) senior secure notes due 2027 sweetened with warrants. The proceeds were to be used for the construction of the terminal.
For investors, this was an attractive deal when it was announced but since then, the demand in the high yield bond market has collapsed due to the Fed raising interest rates.
The stock fell on the news the company has withdrawn the offer.
The Sharp Reaction
The reaction in the stock was very sharp on the news. On the surface, if the company cannot raise funds to complete the terminal, the stock is worthless.
The real reason for the sharp drop in the stock is that at one time this stock was the favorite of the momo crowd and was heavily pumped in the media. A vast majority of these investors bought Tellurian stock way too high and now they are disillusioned with big losses.
Equity Partners
In The Arora Report analysis, the best way to finance the project is to find a strategic equity partner. Large oil and gas companies as well as sovereign wealth funds are sitting on significant cash. In our analysis, Tellurian stock is an attractive investment at this price.
The CEO
One reason to have confidence is that the CEO of the company is Charif Souki. Souki previously built Cheniere Energy (LNG). LNG is a very successful company in the business of exporting liquified natural gas.
Risks
There is no free lunch when it comes to investment. In addition to the financing risk, there are other risks. For example, Russia and Germany could make up and the demand for liquified natural gas could fall. Such a scenario is highly unlikely at this time but nobody can see the future. Only those investors who understand the risks should invest in this opportunity.
Zones
For those following the best way, the buy zone remains 🔒. This buy zone was previously given. This morning the stock fell as low as 🔒 before rebounding to 🔒 as of this writing.
For those following the Good Way, the Buy Now rating is automatically YES because the stock has fallen into the buy zone.
The target zone remains 🔒.
Previously the recommended quantity was 🔒. The new recommended quantity is 🔒 of full core position size.
To learn about full core position size, Good Way, and the zones, please see Trade Management Guidelines and Getting A Running Start Guide.
Diversification By Strategy
Diversification by strategies gives investors an important edge. To the best of our knowledge, The Arora Report is the only service that provides extensive diversification by strategies to private investors, investment advisors, and money managers. The Arora Report uses over 50 strategies to give you an edge.
Tellurian stock belongs in the multi-bagger futuristic strategy with reasonable risk.
The Plan
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What To Do Now
Consider following the parameters given above.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
