The global economy continues to be stretched thin. As a result, the
demand for certain goods and services is decreasing, and exports are
being hurt. Those countries that were the go-to economies for growth
are producing less, and countries with more disposable incomes are
reining in their spending.
When export numbers become bleak, the international transport
business is one of the first industries to suffer. And, some companies
aren’t strong enough to weather the storm at all.
Nordic American Tankers Limited (NYSE/NAT) is a tanker company that
owns and operates double-hull crude oil tankers. Based in Hamilton,
Bermuda, the company’s fleet has grown from three vessels in 2004, to
20 in 2012. The stock trades just above $9.00 and has a book value of
$16.94 and average three-month trading volume of 633,000 shares per
day. Nordic American Tankers has total liabilities of $250 million and
holds almost $86.0 million in cash.
On November 15, 2012, Nordic announced that third-quarter revenue
increased 37.5% year-over-year to $15.5 million. The company’s
third-quarter loss improved to $23.3 million, or $0.44 per share. In
the same prior-year-period, Nordic reported a loss of $37.6 million, or
$0.80 per share. (Source: Nordic American Tankers Ltd. press release,
“Nordic American Tankers’ 3Q2012 Report; NAT Is Very Well Positioned
for a Market Upswing; Dividend Declared; NAT’s Strength Has Become
Significantly
Enhanced and Is Fully Financed Up to November 2017,” November 15,
2012.)
Why has Nordic American’s stock been reporting ongoing losses? The
Baltic Dry Index tracks the price of moving major raw materials by sea.
If the index goes down, this means freight charges are in decline—this
in turn leads to lower profits.
Since the beginning of year, the Baltic Dry Index has fallen
significantly—negatively impacting Nordic American’s profitability.
While revenues may be up, the company continues to be in the red.
That said, Nordic American continues to issue quarterly dividends, and
has done so for the past 61 consecutive quarters. Since the fall of
1997, the company has provided shareholders with dividends totaling
$43.94 per share.
Since the beginning of the year, Nordic American’s stock has lost
approximately 17% of its value. Recently, however, a number of
interesting technical trends have been developing.
At the end of October, the company’s stock traded for as low as
$8.29 and edged a little higher. Since then, the stock has tested this
region three separate times—failing to break lower. The last time the
company’s share price tested this region, it was on increased volume.
In the last couple of days, the stock price has crossed above its
50-day moving average, and the momentum on the moving average
convergence/divergence (MACD) looks to be in favor of the bulls.
Nordic American’s share price has suffered due to global exports
slowing, but it’s not alone. What differentiates this stock from other
shipping companies is that it continues to be fundamentally strong and
provides shareholders with a hefty dividend. The recent price action
also makes it much more attractive.
No comments:
Post a Comment