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General Maritime: Ready to catch up with the market?

Today's Financial News - Posted August 26, 2009

The equities market is up big so far this summer, but not every stock has followed. Is it time for tanker companies like General Maritime (NYSE:GMR) to catch up?

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): Not all stocks are in positive territory these days. Even though the major indices have been nearly unstoppable this summer, a handful of companies are watching their Street values drop lower and lower.

There is no debating the world is using less oil these days. With many producers still pumping the thick, black stuff from the ground at pre-collapse levels, inventories are on the rise and storage facilities are screaming, “no mas.”

It is no wonder companies like General Maritime (NYSE:GMR) are forced to endure reduced demand and lower revenues. The world is simply sending less oil across its oceans. For crude tanker companies like General Maritine, a slow economic recovery that includes rising oil prices is bad news.

But some analysts believe the worst is over. One of them is Robert MacKenzie of FBR Capital Markets. After falling by more than 20% in the last two months, shares of the company are now in “attractive” territory according to the industry export.

Thanks to MacKenzie’s boost, shares of the company are up by over 6% today.

Pump you up

Even after today’s surge, investors are getting a good deal, as long as they are in it for the long haul.

Over the past two months, General Maritime has been an industry laggard. A lackluster Q2 earnings report and a slashed dividend had many investors jumping ship. Because the industry relies heavily on contracted prices and avoids the volatile spot market, we will not see General Maritime’s revenue stream surge anytime soon.

But thanks to healthy leverage ratios and plenty of liquidity, the company is in good position to control its financial future.

As one of the smaller players in the industry, the General Maritime can use the depressed market as a springboard towards renewed growth. Expansion efforts will be the key to increasing shareholder value over the next 12, 24 and 36 months.

The announcement of new ship acquisitions will do little to get share price moving over the next several quarters, but sure enough investors will begin to realize the revenue gains in upcoming years.

General Maritime is far from an in-and-out trade, but if your portfolio needs long-term exposure to a lagging cyclical sector, it is worth a look.

Compare the company to competitors like Frontline (NYSE:FRO) or Teekay (NYSE:TK) and you will like what you see. A 6% dividend should be the icing on the cake.


Next Article: First gains on swine flu vaccine stocks Sinovac (SVA), Vical (VICL), and Dr. Reddy’s Laboratories (RDY)

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Posted by Andrew Snyder · Filed Under Featuring..., US Stocks and Markets 

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