Sempra Energy is making strides in its ECA LNG Phase 1 and Port Arthur LNG Phase 1 projects to address the increasing global demand for LNG. The company is also boosting its investments in transmission and distribution infrastructure. Capital spending is projected to rise by about 30% from 2026 to 2029. Sempra is expanding its renewable energy offerings, focusing on wind, solar, and rooftop solar. This growth aims to take advantage of economic benefits and incentives available in the renewable market.

Challenges Faced by the Company

The company encounters challenges from wildfire risks in California, which can lead to outages and damage to infrastructure. Sempra Infrastructure also faces potential issues with partnerships with Mexican companies like PEMEX and CFE, particularly regarding financial stability and regulations. Sempra Energy’s stock has risen by 17.8% in the past six months, outpacing the industry growth of 12.4%. Other attractive stocks in the sector include One Gas, Inc., Avista Corporation, and Brookfield Infrastructure Corporation, all with strong Zacks Ranks. These companies show promising earnings growth rates and significant increases in earnings per share, such as Brookfield Infrastructure, which is projected to see a 384.6% rise in EPS by 2026. Given Sempra’s ongoing progress with its major LNG projects, the company’s long-term outlook seems bright. U.S. LNG exports reached a record high in December 2025, approaching 14.5 billion cubic feet per day, highlighting the strong global demand that Sempra is ready to meet. This trend supports a positive view on the stock as these large projects near revenue generation.

Investment Strategies in the LNG Market

Sempra’s upcoming capital spending on transmission infrastructure is strategically timed. The International Energy Agency forecasts that electricity demand from data centers will double by 2028, benefiting regulated utilities with major upgrade plans. This provides a stable earnings foundation to balance the more unpredictable LNG market. From a derivatives standpoint, the stock’s 17.8% rise in late 2025 shows strong momentum, but we need to assess if this trend can continue. The wildfire risk in California was less severe than anticipated in late 2025, with CAL FIRE data indicating that acreage burned in the fourth quarter was 40% below the five-year average. This might have lowered the implied volatility in Sempra’s options, making bullish strategies more affordable. Given this, we could consider buying call options to take advantage of potential gains, focusing on expirations after the next earnings report, like the March or April 2026 contracts. This approach could allow us to benefit from any positive developments regarding project timelines or capital spending updates. For a more controlled risk strategy, we could implement a bull call spread, which involves buying a call and selling a higher-strike call to offset part of the cost. However, the risks related to Sempra’s partnerships with Mexican state-owned companies, PEMEX and CFE, remain a concern that could catch the market off guard. To guard against any sudden downturns, we could buy out-of-the-money put options with near-term expirations. This acts as a low-cost insurance policy against unexpected negative news from Mexico or a sudden surge in wildfire activity. By comparing Sempra’s implied volatility to that of peers like Avista, we can assess if the market is accurately valuing Sempra’s blend of stable utility growth and high-potential LNG projects. If Sempra’s volatility appears unusually low given its growth opportunities, it would support the case for initiating bullish option positions. This relative value analysis helps determine whether Sempra’s options are appealingly priced at this moment. Create your live VT Markets account and start trading now.

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