These 2 Recent IPOs in Oil Shipping Show Big Upside

NEW YORK (TheStreet) -- The IPO market in the U.S. remains robust and offers some good long-term investment opportunities. Here are two recent IPOs with a strong growth outlook and a potentially big stock upside.

Dorian LPG (LPG) is a pure-play liquefied petroleum gas shipping company. The stock made its debut on May 8.

The company has three modern very large gas carriers (VLGCs) and one pressurized LPG vessel.

Since its debut, the stock has surged by 22%, and the Street believes there is potential for more upside.

Dorian LPG has a big pipeline of 19 ECO VLGC new vessels, due for delivery by January 2016. With that significant number of new vessels coming into operation, Dorian LPG is set for scorching growth over the next two years. High growth in revenue and EPS will translate into a strong stock upside.

The big differentiating factors for Dorian LPG as compared with its peers are the fuel-efficient ECO vessels. They will yield cost savings of $4,000 per day per vessel, compared with non-ECO carriers. The company will therefore command better margins than its peers.

The shale boom will make the U.S. the largest exporter of LPG by 2015. The biggest importers will be countries in the Asia-Pacific region. Long-distance trade will therefore boost the demand for LPG carriers.

With its modern fleet, Dorian LPG is well-positioned amid strong industry dynamics to outperform.

Nordic American Offshore (NAO) has a limited operating history but a strong growth plan. The company owns and operates platform supply vessels (PSVs) and was listed on June 11.

The stock has surged by nearly 10% from its listing price of $15.25, and the Street believes there is potential for more upside.

Growth for the company will come from its initial fleet of six ships, along with two new PSVs, to be delivered in January 2015.

The company also has the option to acquire three additional PSVs and has signed a letter of intent for them. 

The company also plans to acquire secondhand PSVs.

Nordic American Offshore has paid a dividend of $0.45 per share in the first quarter, which implies an annualized dividend of $1.8 and a dividend yield of 10.8%. Investors will have the double benefit of capital appreciation and high dividends from this growth stock.

Both companies are at an early growth stage and have some exciting expansion plans over the next few years. The outlook for the stocks is promising, backed by strong industry fundamentals.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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