Chart Industries Really Just Getting Started

Chart Industries (GTLS) is still really difficult to model, but I said in my last piece that these shares would have a lot more appeal in the mid-$70s and here we are... and that’s with the company logging a big LNG order in the meantime and likely to book a few more before 2019 is over. I do have some concerns about a near-term slowdown in industrial gas demand, but that is counterbalanced, at least in part, by active efforts on management’s part to cultivate new market opportunities.

As fits a company that is difficult to model, with 2020 revenue possibly 70% (or more) above 2018’s level, Chart Industries shares are beastly difficult to value. The shares do look undervalued on discounted cash flow, but that assumes a reasonably accurate assessment of the size, duration, and profitability of the LNG building boom. The shares could be even more undervalued on a multiple-based approach (the average sell-side target is over $100), but with not even Chart management knowing what normalized earnings will look like over the full cycle, the “right” multiple is pretty much a guess.

Said simply, I think you can buy Chart here and make money, and possibly a lot of money when sentiment fires up again, but this will be a volatile stock.

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Chart Industries Really Just Getting Started