I was looking at shipping companies and came across one called “Nordic American Tankers Ltd.” The dividend yield is attractive and it looks like the price has been stable for awhile. Can you do a technical analysis on this?
Thanks for the assignment. Nordic American Tankers Ltd. (NAT NYSE) owns and charters 24 suezmax oil tankers and has two more vessels under construction in Korea with delivery scheduled for 2016 and 2017. A recent letter from the Chairman and CEO of the company cited lower oil prices as a positive driver in the tanker business. In addition it was noted that supply and demand fundamentals for the sector had been improving for some time.
NAT does business with oil industry majors including ExxonMobile, Shell, BP, Repsol, Statoil, and Total. The quality of the client list is reflection of the quality of the fleet. The company expects charter rates will be $35,000 per day in the first quarter which will generate substantial free cash flow off of $12,000 per day of operating costs.
A survey of the charts will provide a better sense of the opportunities associated with this stock.
The three-year chart portrays a stock that finally broke the downtrend line that had been in place since April of 2010. The base building at $7.00 that started in October of 2012 led to a number of attempts to move higher. The leg up that began in October of 2014 saw the shares move through resistance along the 50 and 200-day moving averages and a golden cross form in December.
The six-month chart depicts the oversold situation that existed in October of 2014 when the MACD and the RSI generated a buy signal. The move higher took the shares to a 52-week high of $12.08 before the shares became over bought and pulled back to support at $10.00. In the last two days of trading the stock has moved higher with conviction. The next test for NAT will be a move through $11.50 with conviction.
The dividend is producing a 7.75% yield which is quite attractive in today’s environment. If the stock can break above $12.00 there isn’t much resistance until $20.00.
Next time I will analyze Silver Wheaton Corp. (SLW TSX) for Anthony.
Make it profitable day and happy capitalism!