Tanker title with 24% undervaluation, a clean balance sheet and room for further growth
Tanker stocks usually only attract attention at the extremes of the cycle: when rates are flying to the stars, or when the sector is drowning in losses. But today, there is a player that has managed to use the last super-cycle to almost completely deleverage, sitting on record cash, trading at around 6 times earnings, while still benefiting from a tight midstream tanker market whose orderbook remains near historic lows.
Even after rate normalisation, it has had several years of exceptional results, double-digit EPS, very high margins and is now starting to return capital to shareholders in the form of dividends and other payouts without sacrificing the safety of its balance sheet or the potential for further growth. For the investor looking for a combination of undervaluation, a strong balance sheet and exposure to the mid-size tanker cycle, this is a name that may pleasantly surprise in the years ahead if the tight market holds longer than the market is pricing in today.