By Nigam Arora & Dr. Natasha Arora
Signal Limited is a Signal(s) with a great record in similar situations but does not meet all of the stringent criteria for a Signal. Typically Signal Limited has higher risk-reward compared to a Signal over the short term.
The Opportunity
Due to the Russia Ukraine conflict, Europe is looking for new sources of gas. The U.S. has an excess supply of natural gas.
The way to export natural gas to Europe from the U.S. is to liquefy it and then ship it on specialized ships. Liquefying natural gas in large quantities is a complex and expensive process.
Tellurian (TELL) 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 liquefied natural gas per year.
Multi-Bagger Stock
Tellurian is a speculative stock with the potential to be a multi-bagger stock. Please read the section titled Speculative Positions in the Trade Management Guidelines to learn more. Speculative positions can be very lucrative when managed correctly. For details, see the Trade Management Guidelines.
The Problem
It takes billions of dollars to build a liquefied natural gas terminal. Tellurian is having trouble financing the project.
Since the deals between Tellurian and Shell (SHEL) and Vitol fell apart last fall, it was unclear if Tellurian would be able to secure the necessary financing.
Optimism
There are two reasons for optimism.
- It appears that Tellurian has continued to build the terminal while searching for additional financing.
- Tellurian has advanced the project funding through leaseback letter of intent and execution of a $1 billion land sale.
The Question
If Tellurian is able to raise the necessary financing, the stock will go higher. How much higher will depend on the terms of the financing.
On the other hand, if Tellurian is not able to raise a sufficient amount and more time passes, the value of the project will diminish, and the value of the stock could go to zero.
What To Do Now
For those who are holding TELL as a very small portion of a well diversified portfolio and understand that the stock can go to zero, there is merit to holding.
For those who are not in the stock and wish to add a highly speculative position with the understanding that the stock could go to zero, consider scaling in the buy zone of 🔒 (To see the locked content, please take a 30 day free trial). The maximum recommended quantity is 🔒. Please read the Speculative Positions section of the Trade Management Guidelines.
Targets will depend on the terms and will be given when more information is available. If financing is secured with positive terms, it would not be a surprise to see the stock go to 🔒 as the first target zone. If the company survives with a good balance sheet, in the very long term, the stock can go to 🔒 under an optimistic scenario.
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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.
