The vision of American energy independence has been bouncing around political and economic circles for decades. The widespread embrace of hydraulic fracturing (aka fracking) has brought this vision many steps closer to reality.

#-ad_banner-#About five years ago, I worked with a niche hedge fund on developing alternative long-term investment ideas. One of the ideas we looked at was the massive supplies of natural gas that fracking was beginning to produce. We projected that an overabundance of natural gas would keep prices low for some time.

This prediction held true until a spike during this year’s first quarter, but long-term projections for the next two decades call for an average price of $4 to $5 per million BTUs — which would make U.S. natural gas the cheapest in the world.

Huge profits could be made by selling this resource to regions around the world that need the fuel — but the problem lies in exporting it in a cost-effective way. If U.S. producers can solve this problem, America could become energy-independent and an exporter rather than an importer of energy.

Part of the technical solution to this problem requires immense investments in infrastructure, representing one potentially lucrative opening for investors. The solution also involves condensing natural gas into a form that’s more economical to transport.

The regulatory solution for exporting natural gas is coming along rapidly, with the U.S. government’s recent approval of eight terminals for exporting this condensed form of the fuel. 

In this map, you may have noticed the initialism LNG, which stands for liquefied natural gas. Formed by cooling natural gas to minus 260 degrees, LNG takes up to 600 times less volume than the gas itself.

The problem with natural gas has always been how to transport it without the use of pipelines. LNG solves this by reducing the space and expense required to transport the fuel to regions not served by pipelines. Transportation costs typically increase with distance, but shipping costs for LNG increase at a much slower rate than natural gas.

While widespread U.S. commercial interest in LNG is new, the fuel itself has been known for many years. During the 1970s energy crisis, the United States tried unsuccessfully to get a handle on this form of energy. However, growth grew quickly in the Asia-Pacific region, resulting in an LNG trading market.

This market is based in part on long-term contracts that are for 20 years and are truly a front-loaded investment. An LNG spot market has developed under these contracts, but trade remains dominated by just a few major players.

While most regular investors are precluded from participating directly in the LNG market, profitable opportunities exist in the infrastructure buildout. Here are two stocks poised to profit from LNG:

Risks to Consider: While I am convinced that LNG will eventually be a major boon for the United States, a variety of legislative and regulatory hurdles remain. Investors who wish to profit from the infrastructure buildout should be prepared for a long wait. Always use stop-loss orders and diversify when investing.

Action to Take –> I like Dominion as a momentum play on a breakout above $73. Stops should be set at $69, and my 24-month price target on D is $85. On the other hand, GTLS has fallen into the value buy channel. I love this stock at in the $75 to $65 channel and expect a run back above $120 within the next two years. I recommend hard stops at the $59 level in case my analysis proves incorrect.

P.S. My colleague Dave Forest just got back from visiting what could be the world’s first “Trillion-Dollar Boomtown.” This resource-rich region is soaked with oil and natural gas — and several companies are poised to make billions. To learn more, follow this link.