Cramer's "Not My Favorite" at a New Low: A Tactical Setup

The setup is clear. Cheniere shares fell to a new 52-week low of $187.19 on Monday, trading well below its key technical support levels. This move to a fresh low, after a nearly year-long slide, creates the immediate tactical event. The catalyst for this specific mispricing, however, is a stark shift in sentiment from a major market voice.

On January 6, 2026, Jim Cramer delivered a direct warning, stating "it's not my favorite right here". He explicitly preferred higher-yielding MLPs like ONEOK and Enterprise Product Partners, framing them as better growth and yield plays. This is a notable pivot from his own earlier bullish stance just months ago. In a December 2025 appearance, Cramer called LNG "one of the best stories of the next decade," citing the US-EU trade deal as a potential driver that "should have gone higher."

The contrast is the tactical opportunity. The stock is underperforming, hitting new lows, while the long-term LNG tailwinds Cramer himself once championed remain intact. His recent commentary introduces a layer of sentiment risk that may be overdone, creating a potential disconnect between the stock's weak price action and its fundamental story. For an event-driven strategist, this divergence between a fading sentiment catalyst and a persistent structural theme is where the setup begins.

The Mechanics: Earnings, Yield, and the Yield Trap

The tactical setup hinges on separating the stock's weak price action from its underlying financial health. The Q3 earnings report provides a clear picture of this divergence. The company delivered a significant beat on the bottom line, posting $4.75 in earnings per share, which crushed the consensus estimate of $2.75. Yet, it simultaneously missed on the top line, reporting revenue of $4.44 billion against a $4.87 billion forecast. This is a classic "beat on profit, miss on sales" pattern, often signaling strong cost control or one-time items boosting EPS, but also potential pressure on future growth visibility.

The yield trap is where sentiment meets mechanics. Cheniere recently raised its quarterly dividend to $0.555, resulting in an annualized yield of just 1.2%. This is the core of Cramer's recent preference shift. He explicitly cited the higher-yielding Cheniere Energy Partners (the MLP) with its 6.27% yield as a better near-term play. For yield-focused investors, that 500-basis-point gap is material. It makes the common stock less attractive despite its LNG exposure, especially when the MLP offers a similar growth story with a much juicier income stream.

This creates a mispricing dynamic. The common stock's low yield may be pulling down its multiple, as investors seek better income elsewhere. Yet, the solid EPS beat suggests the core business is still profitable and generating cash. The recent insider purchase of $1 million worth of shares by a director also signals some internal confidence. The low price, therefore, may reflect a temporary sentiment-driven discount on yield, rather than a fundamental deterioration. For an event-driven strategist, this is the gap to exploit: the stock's weak price action is being amplified by a specific yield comparison, even as its operational fundamentals remain intact.

The Trade Setup: Catalyst, Valuation, and Immediate Risks

The tactical framework is now clear. The event-the Cramer warning-is creating a mispricing against a persistent structural theme. The valuation, however, is not cheap by any stretch. Cramer himself previously argued the stock was "pretty darn cheap" trading at just 10 times next year's earnings, based on an $8.62 per share estimate. That math has been upended by the stock's 59% year-to-date run-up. The market has already priced in significant optimism, leaving little room for error.

This sets up a high-risk, high-reward scenario. The immediate catalyst is sentiment-driven. Cramer's recent pivot to higher-yielding MLPs introduces a layer of near-term pressure, but it may be overdone given the LNG tailwinds remain intact. The key is to monitor for concrete validation of those tailwinds. The US-EU trade deal is the named catalyst, but its payoff hinges on increased European LNG demand and new contract signings. Until there are tangible signs of that demand materializing, the stock's path will be volatile.

Near-term risks are multifaceted. A broader market selloff could easily drag down Cheniere, as Cramer noted the recent rally is driven by emotion and momentum buying. Continued high interest rates also pressure valuations for growth stocks. More specifically, execution delays at new LNG facilities represent a fundamental operational risk that could derail the earnings trajectory Cramer once cited. The yield trap-where the common stock's low yield makes it less attractive than its MLP sibling-adds another layer of sentiment risk.

The tactical takeaway is straightforward. This is a trade where the event creates a mispricing, but the valuation is not a deep value play. It's a bet that the structural LNG story will reassert itself, overcoming near-term sentiment and valuation headwinds. Success requires patience for demand validation and a tolerance for volatility. For an event-driven strategist, the setup is defined by a fading sentiment catalyst against a persistent, but now fully priced, theme.