In good times, tanker stocks are true cash machines. But when there is a stiff breeze at the markets, then doom is foreseen. Currently, the market seems to be pricing in the end of business once again. This gives courageous investors the chance to pick up low-valued stocks with high dividend yields at low prices. One of these countercyclical opportunities is the share of DHT Holdings.
After record year: The tanker blues are being played on the markets!Due to the sanctions against Russia, the cards in the international oil business have been reshuffled. Completely new supply chains emerged. Crude oil, but also products derived from it such as gasoline or diesel, are now increasingly transported across the oceans and over much greater distances. This drove up freight rates for supertankers. For the owners of the ships, 2022 was a year of turnaround that began with a quarter of losses and ended with record profits - with share prices rising sharply accordingly.
Economic worries, but also the news published at the beginning of April that the OPEC+ countries intend to reduce production from May, abruptly ended this rally. The opportunity for investors: Some of the shares in this sector are valued at ridiculously low levels, and lavish dividends await. We have taken a closer look at this extremely cyclical sector. One favorite: DHT Holdings (NYSE: DHT | US$ 8.02).
High profits or huge losses: Tankers an extremely cyclical business!Oil demand has increased by an average of 1.1 million barrels per day per year since 1990. Accordingly, tanker shipping has also grown - albeit not in a straight line, but in the form of boom and bust cycles. When the outlook seemed good, too many new ships were put into service. This spoiled the prices. As old ships were scrapped, freight rates picked up again. Currently, we are in a phase of good demand, but hardly any new tankers are being built due to sharply rising costs for newbuildings. This is positive from the point of view of the industry. A tanker has an economic life of 15-25 years.
Companies such as Scorpio Tankers, Frontline plc or DHT Holdings function in principle like a car rental company, where the ...
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