Tsunami Reshapes Shipping Lanes

Many of the front-line oil, drybulk and cargo shipping companies in the world have become well known to investors in the past year, as their earnings improved along with oil prices in 2004. Damage to the Straits, not to mention a rekindling of oil prices, appear to be doing the same now, as shipping stocks approach, and rebound from, long-term price supports.

Shares of Stolt-Nielsen (SNSA), a British-based shipping conglomerate, have performed best since the damage to the Straits became evident, topping its historic 1997 high of $31 earlier this week. Sporting a $1.9 billion market cap, it is a little cheaper than its peers due to some divisions that are a little far afield. Profits have been elusive despite $2.3 billion in trailing 12-month sales, but they're inching back.

Frontline (FRO), the world's largest tanker company, has also seen shares improve of late. The stock rose as high as $64.25 in November, then backed off to its 200-day moving average. Shares found support there, and have advanced 2% for the year, which isn't much but does outpace the broad market. Frontline runs 31 Suezmax-class tankers and 35 VLCC-class tankers, totaling a carrying capacity of 15.3 million deadweight tons. The company says most of its vessels trade in the spot market, which yields higher prices at times like these as it is more responsive to event-based demand. Frontline sports a $3.3 billion market cap, $1.7 billion in trailing 12-month sales and $604 million in income.

Some smaller companies to consider are Excel Maritime Carriers (EXM), a spot-market focused drybulk carrier based in Bermuda but run out of Greece. This $225 million market cap stock was a momentum trader plaything last year but has backed off to long-term support. The stock of Tsakos Energy Navigation (TNP), a larger Athens-based firm with 28 modern oil tankers, could likewise find support from its recent decline to around $33.25.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Excel Maritime to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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