Liquefied Natural Gas (ASX:LNG) is being added to the S&P/ASX 200 this month with the implicit recommendation that it should be bought for the nation's most...
Liquefied Natural Gas (ASX:LNG) is being added to the S&P/ASX 200 this month with the implicit recommendation that it should be bought for the nation's most risk averse investors. The company has three development sites and $50 million in the bank but no sales, profits or even commercial contracts committing to future income to support a $1.8 billion market value. There is no prospect of a profit for at least four years. It has no in-ground resources. The company's management can be proud of what it is achieving but there has to be a better reason to push a stock into superannuation funds, for example, than a 1500% share price rise. At a minimum, a moratorium is warranted to see if such a rapid rise can be sustained before a company is given a slot in the market's premiere index.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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