Lately I've seen many stocks that look overbought, but just keep going up. LIZ for example. (I only know this stock because my mother bought it in Sept for $5 when I told her it was a bad pick because they were losing money and she likes to hold stocks for years) Anyway...in october the stock started spiking and jumped 30% in 1 day. Next day it went up again and then again the next day. Today the stock is at $12 and still going up. It never had a double digit drop until the price got near $10 and it recovered very fast. I still don't know why anyone would buy that stock, but it seems to be on the radar and keeps going up all the time. I also remember PALM becoming a 4 bagger in 6 weeks in dec 2008 to mid jan 2009. Everyday people said it was overbought. Anyway, I'm actually planning on holding this stock for a while so I'm not concerned about the normal day to day swings. I know there is a good chance its going to $30 by summer as tanker rates have jumped over 100% in the last week or so. As summer comes along and we use more oil, those rates will get higher and might even lead to a divy payment which would really skyrocket this stock. I hear some people talking about rates getting as high as $250k per day(maybe they are dreaming), but if we have a consistant rate of $50k per day for VLCCs, there is no reason why FRO wont be trading between $30-$50 per share.
It is selling off pre-market faster than the rest of the market, I'd be careful entering today, the ones who missed the big gains the last two days could lose their shirts
At least 2 years til we see those days nearly return and there will be less companies in the industry by then in my opinion.
I dont see it happening in my life time. there might be less company but those new fleets of double hual are just starting to go in the water. over capacity = less spot prices.
There are many tankers going bankrupt right now though. Bank reposesses the ship and then sits on it. It takes a bank roughly 5 or 6 months to short sale a $250k house. How long do you think it would take to short sale a $120+ million dollar ship in a sector where nobody wants to buy more ships? I believe a shipbreaking yard will pay $40 million for a VLCC. Banks might be sending ships there just to stop bleeding money on the costs associated with holding a ship.
If you want a $5 quarterly dividend try TNH. Of course you're not going to buy that stock for $7 or $8 per share. You're going to pay $225 per share because its already established. Of course if you had bought that company in 2003 when they also stopped paying a dividend for a whole year, you could bought it at $4 per share.... Might have been nice to drop a $4k investment in them back then only to see your money grow to $225,000 while getting $18,000 in dividends just for this year (and not counting the 10s of thousands of dollars received in divys the last few years) Thats almost a 75% per year compounded return. Not easy to do that. Anyway back to FRO. What do you think the worst is that can happen? Oil tankers are not going away anytime soon. And if you are going to bet on a tanker company, bet on one that is owned by Fredriksen the worlds greatest shipping magnate. In my opinion, betting on him is like betting on rockefeller.
Nothing is wrong with your argument but I hate sitting on dead money. My time line are weeks and months not years. I am not buffet enough to wait for that kind of setup. I find a trending sector and trade it until it gets choppy then I find another. right now I dont see a definate trend in the tankers. 2006-mid 2008 I was in this sector, havent revisit it since then.