4 Surging Small Caps That Could Head Go Higher

Cheniere Energy(LNG)

Back in 2006 and 2007, this company was a key member of many energy-focused portfolios. Cheniere was building specialized energy terminals that could receive and house imported liquefied natural gas (LNG) in the Gulf of Mexico to help the United States address a looming shortage of natural gas.

But by 2008, dozens of untapped new gas fields were found, creating a sudden glut and removing the need for natural gas imports. Shares subsequently lost 90% of their value.

Yet Cheniere is turning lemons into lemonade by repositioning its energy depots to export LNG. The move makes sense. The U.S. is now the world's largest producer of natural gas, exceeding output in places such as Russia, Iran and Australia. And the price of natural gas in Asia is 150% higher than here in the U.S.

Cheniere initially planned to build three LNG terminals but was stopped in its tracks after the first one was built. Those stalled second and third plants may get the green light -- if the company can secure a range of long-term supply agreements. China has already signed on, and other Asian nations may follow suit. Despite the recent pop, this could quickly become an even hotter stock if new contract agreements are announced.

Action to Take: Both iStar and Cheniere are high-risk/high-reward plays that could merit a small speculative position. It would be nice to see a pullback (which should be a rule of thumb with any hot momentum plays), but a clear case can be made for significant further upside. Motricity and Broadsoft surged last month for justifiable reasons, but they've gone too far, too fast.

This article originally appeared on StreetAuthority. To read more articles from David Sterman on StreetAuthority, you can visit this link .

Disclosure: At the time of publication, David Sterman owned no positions in the stocks mentioned.

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