Nordic American Tanker Shipping Limited (NAT)

Chinas growth means more oil imports and only Double hulled tankers will be permitted to make deliveries after 1-1-10,Plus day rates starting to go up,Last quarter was bottom for nat

Solid dividend. CAPS disagrees with Wall Street.

Mad Money - Cramer Pick

Nordic American has no debt and their cost of operations is about $10,000 per tanker per day. They make money when all the other companies are losing it. They buy tankers cheap from their over leveraged competitors, and pay out a hefty dividend. it's all good.

On price alone, this stock may not outperform the S&P 500, but with the dividends, it will. Innovative business model that leads to no debt.

bet that when the BDI turns, this will turn big.

Nice dividend,plus recovery play.No debt

Following JakilaTheHun with this one.
See his excellent pitch of 8/27/09.

Jakila shipper pick with no debt and a tasty yield.

Could get significantly cheaper in the coming months, but I'm going to go ahead and green thumb. I like the idea of a tanker company with no significant long-term debt. Net tangible assets are worth more than $22 per share. The company has been good about paying out dividends, as well.

NAT has had a poor year by historical standards. They've only earned 44 cents per share over the first two quarters. If I annualize that (88 cents per share), assume a 3% growth rate, write down their vessels by 12%, and assume some minor dilution, I come up with a valuation of $32. The stock is selling at $30, so you can see that this is not the typical JakilaTheHun deep value stock.

However, I like their management's strategy and I'm impressed by the company's past performance. With little debt, NAT is not nearly as risky as other tankers. In a sense, they could be in a win-win long-term situation because if things start to improve, their earnings and cash flows will improve, as well, making the stock worth more. On the other hand, if things continue to get worse in the industry, it might mean that some of their weaker competitors get weeded out, which would be very beneficial to them given their strong balance sheet.

While the present doesn't look spectacular, NAT's past performance has been impressive. They've had earnings of $3.62, $1.56, and $3.14 per share in FY '08, '07, and '06, respectively. Not too shabby, eh? Also, while earnings will suffer a bit in the current environment, free cash flows might get a bit of a boost.

If I run a quick DCF with a 1st year FCF forecast of $1.25 per share (and a 3% growth rate), my valuation jumps to $37.50, which seems pretty realistic to me over the long-term. I'm betting that the company grows long-term, though, so I think this is potentially worth $40 - $50, plus the dividends. That's not too bad. If nothing else, this helps hedge my green thumb on Tsakos (TNP) a bit.

Stong dividend at 10+%. Stong balance sheet, no debt, expanding fleet of oil tanker storage with excess supply in forseeable future for oil. Ability to expand with stock sales.

NAT is a great company I have owned shares for the last year. The price just dipped because revenues were down. But so what. They have it down so they can make money off of daily tanker rates even lower than one half of the present rate. So this one is good.

great dividend and performance

spear pick

Solid company in a highly profitable business and good management. But the big one here is a 15% yield, which virtually guarantees an outperform (seeing as the stock price moves with the market).

Huge dividend yield.

Considering Book value, earnings, and market cap...this should beat the market in 5 years.

DIVIDEND Yield 15.56% READ LETTER TO SHAREHOLDES BELOW AND ON NAT'S WEB SITE
Dear Shareholder,

In today's volatile situation in the international financial markets many shareholders are contacting us to learn more about the situation of the company. Therefore, I am personally writing this letter to you. In particular, I wish to comment on value creation and growth.

In short, Nordic American is well positioned for further strong growth and increase of its dividend capacity.

Nordic American has:

* a strong balance sheet, a positive cash position, no net debt and a unused credit line of $500 million which offers us financial flexibility

* the financial capacity to acquire vessels without issuing more equity at this time

* a low cash break-even level, and

* a full pay out dividend model.

In January, we announced the agreement to acquire our 15th suezmax tanker and in early May 2009 we announced the acquisition of our 16th suezmax tanker. The cost of these two vessels, in total about $114 million, will be paid from out of our available capital resources prior to the recent equity offering.

On May 18, 2009, we closed the previously announced underwritten public offering from which we raised $130 million, before expenses. These funds will be used for further acquisitions beyond our 16th suezmax tanker.

With the offering, we have positioned the company for further expansion. Such an expected expansion has as its main objective to enhance the ability of the company to deliver higher dividends and earnings per share than had the expansion not taken place. In the autumn of 2004 our fleet stood at three ships. Now we have 16 ships.

In the period between the autumn of 2004 and now, our fleet has grown faster than our company's share count. The result is that under our dividend policy, each share receives a higher cash dividend than had the growth process not taken place.

Our recent equity offering and our credit facility place us in the current position of being able to acquire more vessels without having to issue additional equity at this time. We expect to increase our fleet further during 2009 - with no guarantee being given in this regard.

We have a non-bureaucratic and streamlined decision making process and our board can decide an acquisition very quickly when and if the opportunity arises.

We normally undertake equity offerings in order to fund future acquisitions, not to finance ships that we already own. We do not go for an equity offering if we believe it will be dilutive to dividends and earnings per share over time. This is because our main objective is to achieve the best total return for our shareholders - an expression which indicates the value creation taking place. The concept of total return is the sum of the stock price and the dividend, assuming that the dividend is reinvested in the stock.

Nordic American has over the years created consistent value to our shareholders. We have a young and modern fleet with an average age of about 8 years. Over the years we have kept the average age profile down in the growth process. The useful life of a vessel is 25 years or more.

We focus on cost efficient operations and, including all cash expenses, we estimate that our cash break-even for our trading fleet is below $10,000 per day per vessel. When the spot suezmax tanker rates are above this level, you can expect that our company will pay a dividend. This cash break-even rate is very low compared with other companies in the industry.

We often receive questions about our dividend. The amount of our dividend per share is above all a reflection of the level of the spot tanker market. In stronger suezmax spot tanker markets the quarterly dividend can be expected to be higher than in a weaker spot rate environment. For the whole year 2008, the Company's dividend was $5.26. The Company has now 42,204,903 shares outstanding.

The last five years, as from 2004 up to end 2008, the average annual cash dividend yield paid to shareholders has been about 13.9% per annum - being the cash dividend over the average stock price each year. Over a longer period the same strong yield picture is clear. Our Board of Directors is committed to continuing the full pay out dividend policy. The Company has paid a dividend for 47 consecutive quarters since the autumn of 1997 when the first three vessels were delivered and commenced operations.

I am optimistic about the future of Nordic American. In one year or so NAT can be expected to have a substantially higher dividend and earnings capacity than today. We are well placed in a strong rate environment. In a weaker spot tanker market, we can strengthen our position in particular relative to the companies that face financial difficulties. We have achieved a lot in pursuing our main objective - the best possible total return and value creation.

We shall be faithful to our strategy and stay the course.

Going forward, we shall continue to safeguard the quality of our balance sheet.

Many shareholders contact us expressing views and recommendations. Please continue contacting us for any question or comment you may have. My email is herbjorn.hansson@scandicamerican.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it

I like the balance sheet and dividend