BG Group (BG)
The BG Group is set to complete its liquefied natural gas (LNG) project in Australia in the second half of 2014. The implementation of this project will provide BG with significant free cash flow growth for the years ahead; however, this fact is not yet reflected in the present share price. Furthermore, with the start-up of the LNG operations in Australia and the ramping up of the Brazilian oil operations, BG will become less dependent on its struggling assets in Egypt and the North Sea.
The free cash flow generated will most likely be returned to shareholder via share buybacks and special dividends. The share price is therefore well positioned to take advantage of the good company fundamentals. Based on historic P/E valuations, the company is presently trading at around a 7% discount below the long-term median value. From a technical point of view, the present price level of about GBP 12.20 offers a double support level.