The Company is a provider of international seaborne crude oil and petroleum product transportation services. It owns a fleet of modern tankers providing world-wide marine transportation services.
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With a high yield and lots of profitability, I see only 1 reason to not green-thumb TNP immediately.
This pick is likely riskier than I'm aware of, especially with its 1.4 billion in long-term debt. The market may know something I do not. If ROE stays low, then perhaps the large debt would have been a bad gamble. However, I'm predicting ROE will be 20%+ in coming years, which means that more debt may be a good thing.
Anyhow, this pick was poached from bullishbabo.
BFB
Oil tankers are much less risky than dry bulk. I recently bought vlccf, though it has a much lower debt level.
This sector is still very risky though. I wouldn't put too much importance on ROE. I think that ROE is going to be negative for this sector (in the near future).
http://hugin.info/132879/R/1334933/317105.pdf
Look at page 10 in this document. New orders for the capesize category represents 80% of the total existing fleet. Can you imagine how much glut of ships there is going to be.
By 2012 the orders are going to start decreasing sharply. That is why I am very concerned about high debt levels. I think that DSX for example is going to buy many ships at fire sale prices. BEWARE.
Just for reference, the debt maturity schedule for TNP is as follows:
Year
2009: 91,805,000
2010: 102,679,000
2011: 105,195,000
2012: 105,195,000
2013+ 1,108,755,000
...So with the current 300 million in cash on hand, they should be good through 2011.
Here's hoping the accountants aren't thieving liars. :)