2-Star Stocks Poised to Plunge: Cheniere Energy?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, liquefied natural gas company Cheniere Energy (ASE: LNG) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Cheniere's business and see what CAPS investors are saying about the stock right now.


Headquarters (Founded)Houston (1983)
Market Cap$791.2 million
IndustryOil and gas storage and transportation
Trailing-12-Month Revenue$293.3 million
ManagementCo-Founder/Chairman/CEO Charif Souki
CFO Meg Gentle
Return on Capital (Average, Past 3 Years)1.1%
Cash/Debt$131.3 million / $3.0 billion

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 16% of the 545 members who have rated Cheniere believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, All-Star BuffettJunior1, nicely summed up the bear case for our community:

The company has almost $500 million in short-term debt, and another $2.5 billion in long-term debt. The company has very little cash on hand, about $131 million. The company has never been profitable. So why does this company have a $770 million market cap? Is it because it's in the natural gas industry? Now, I'm no expert when it comes to natural gas, but I do know one thing, currently there is an oversupply of it. Basic economics tells you that once supply outstrips demand prices must go down. Lower prices mean lower profits, a bad thing for an already unprofitable business.

What do you think about Cheniere, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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