Andrew Gordon, Senior Market Analyst of Investor's Daily Edge, advises investors four tanker companies to keep an eye on.
Delray Beach, Florida (PRWeb) April 26, 2007 -- When oil companies began to change their ways and become more environmentally aware, the industries that served them such as oil services, rig manufacturers, oil transporters, etc. also had to change. And that's what gave the sleepy tanker industry new life … and new possibilities on Wall Street.
According to Andrew Gordon, Senior Market Analyst of Investor's Daily Edge, "…with surging crude prices, new environmental regulations gave oil companies the mandate and money to demand changes from tanker companies … It has forced tanker companies to reinvent themselves from old-fashioned, loosely run companies with aging dirty tankers to companies with highly trained crews and sparkling new double-hulled tankers."
Still, tanker companies such as Frontline, OMI Corp., General Maritime Corp. and Overseas Shipholding Group remain incredibly cheap. Why such low prices for companies with freight rates and the market breaking their way?
Gordon adds, "One reason is that the tanker market is a notorious cyclical industry. Investors don't pay as much for companies whose good days are always numbered. But that's only part of the story. The other part is the contradictory views of the market."
He continues, "I'm seeing two things taking place inside the tanker world that fully backs up one side of this rift: tanker companies are still ordering ships. With the costs of building tankers getting steeper by the day, that wouldn't make sense if oversupply were on the horizon. And the oil majors are locking in at historically high rates for longer periods than ever before. While tanker rates have dropped some since their 2004 highs, they are still expensive. Charters that were contracted out for 1.5 or two years a year ago are now going for three, five, and up to seven years."
Chartering is a form of hedging against future price increases. The oil customers of tankers are increasingly afraid of rates going higher … not lower. This is symptomatic of a very tight market that shows no signs of unwinding.
According to Gordon, "Because tanker stocks aren't getting any respect these days, sooner or later they're going to break out in a big way. But capital appreciation is the frosting on the cake. What these tanker companies do better than anybody else - even better than REITs - is manufacture yield."
For more information and to read the full article, visit Investor's Daily Edge at http://www.investorsdailyedge.com/archive/index.php
About Andrew Gordon and Investor's Daily Edge (www.investorsdailyedge.com)
Mr. Gordon has a Master's Degree from the London School of Economics and over 25-years of experience. He's also authored six books on the global markets, including China's Oil and Gas Industry, and The World Coal Market. Mr. Gordon specializes in identifying deep value companies with a solid margin of safety as well as income investments with a strong potential for capital gains. He has also become a leading expert in utilizing Exchange Traded Funds (ETFs) to profit from rising and falling market sectors. Mr. Gordon is currently the Editor-in-Chief of two monthly investment research services - INCOME and The Wealth Advantage.
Investor's Daily Edge (www.investorsdailyedge.com) is a free investment newsletter that's delivered by email before the market opens. In each weekday issue you'll receive clear recommendations and practical strategies for protecting your portfolio and multiplying your money - whether the market is rising or falling.
For more information about our editors, or to set up an interview, please contact Wendy Montes de Oca at 561-921-0001 or visit www.investorsdailyedge.com.
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