"This is a longer term call," Mavrinac said in a phone conversation. "This is for guys that can afford to look through that trough." He noted that tanker rates (and tanker share prices) will likely remain choppy over the next few months as the Northern Hemisphere's uncommonly frigid winter eases into spring and as ongoing contango trades eventually unwind, turning loose onto the market those ships that traders had used as floating storage for their crude-oil positions. Both circumstances would lead to weaker rates over the short term.
But, according to Mavrinac and others, the longer-term fundamentals look strong, with global economic recovery leading to decreased crude inventories, leading to an OPEC decision to open the spigots, leading to increased demand for tanker transport, leading to climbing tanker shipping rates.
"The sell side still hates" tanker stocks, Mavrinac said. "But when OPEC increases production, people are gonna herd up to buy them."
He foresees a series of "outsized gains" as tanker companies post strong quarterly profits. "It'll be a beat-and-raise type of environment."For the analyst, three names stood out among those companies highly leveraged to the spot market : Nordic American Tanker (NAT - Get Report), Overseas Shipholding and Frontline (FRO - Get Report), all of which he upgraded to buy from underperform. Nordic, for example, has 12 of its 13 vessels on the spot market, while Overseas Shipholding and Frontline have two-thirds of their fleets exposed there. Shares of Teekay Corp. (TK - Get Report) led the advancers Monday, gaining 7.7% to $26.87. The stock touched a new 52-week high of $27.14 intraday.