Nordic American Tankers (NYSE:NAT)
After receiving an upgrade from investment bank Jefferies Group, shares of ocean-going oil tanker company Nordic American Tankers (NYSE:NAT) skyrocketed in afternoon trading on Tuesday, climbing 10.2% through 1:30 p.m. Eastern Time. This gain was sufficient to reverse the stock’s losses after the company reported earnings the previous week.
According to research compiled by The Fly, investment firm Jefferies has recommended buying Nordic American Tankers (NYSE:NAT) stock and increased its price objective by 33 percent, bringing it up to $4 per share.
The move was explained by the analyst who pointed out that spot rates for chartering “huge” and “ultra-large” oil tankers have reached “healthy levels” in a market where the supply of tankers is tight and likely to get tighter as a result of European Union bans on imports of Russian oil disrupting established tanker traffic patterns. This move was made in response to the analyst’s observation that spot rates for chartering “huge” and “ultra-large” oil tankers have reached.”
At the same time, Nordic American Tankers (NYSE:NAT) is exerting an effort to expand its share of the oil transportation business, which is now experiencing tight conditions. After reducing its fleet to “around 20 vessels,” management has stated that it intends to increase the size of its fleet over the next three years and increase the number of dividends it pays out.
Given that Nordic American Tankers (NYSE:NAT) already offers a dividend yield higher than the market average of 2.9%, this is undoubtedly music to the ears of income-seeking investors. Additionally, Nordic is likely in a position to increase its dividend payout.
As I mentioned in my post from the previous week, Nordic American Tankers (NYSE:NAT) is not a stock currently producing a profit. However, the charter rates on this company’s tankers have increased by more than one hundred percent since the beginning of the year, and they are continuing to go up. As a result, industry analysts predict that this business will turn a profit for the first time in two years in the third quarter.
When a company has more profits, it has the opportunity to pay out a more significant dividend. Jefferies may have come to the same conclusion, which is why the firm upgraded its rating today.
Featured Image- Megapixl @Jcamilobernal