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Buckingham: OMM Boosts OMI

01/30/2004 12:00 am EST


John Buckingham

Editor, The Prudent Speculator

With a focus on both value and growth, John Buckingham has compiled the top long-term performance record in the financial newsletter industry. One of his favorites, an operator of oil tankers, is a play not just on oil, but also on pending environmental changes that impact the industry.

"The International Maritime Organization (IMO) has adopted stricter regulation governing the worldwide crude oil and petroleum tanker industry. Single-hull tankers were already scheduled to be banned from European ports and it is estimated that 12% of the world tanker fleet will be banned by the end of 2005. This is good news for OMI (OMM NYSE), a major international tanker owner and operator. Its modern fleet is comprised of 36 vessels with six vessels scheduled to be delivered in 2004 and 2005. Thirty are doubled-hulled or double-sided and all of the new vessels will be double-hulled.

"In addition, 70% of the company's tonnage operates in the spot market, giving it the ability to take advantage of the rising rates seen over the past year or so. In fact, through the first nine months of 2003, OMI's revenues jumped 68% and earnings per share soared to $0.80 from $0.04 in the year-ago period. We think that OMI is well-positioned for growth and the stock is cheap, trading for nine times trailing 12-month earnings and 1.3 times book value. Our buy limit is $9.18 per share."

Editor's note: We caution readers not to confuse the regulatory agency (IMO) with the stock (OMI) with the symbol (OMM).

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