Exxon's Delivery Guy

Oil-tanker companies are fetching high prices for their crude carriers these days, Cramer said, pushing up the sector’s stock prices and dividend payouts.

Frontline – up 18% since Cramer’s call last July; up 38% including dividends – has been a Mad Money favorite, but Nordic American Tanker was Thursday’s pick. The overall number of tankers on the high seas is barely staying flat, if not decreasing, even despite heavy demand from OPEC and others, and NAT’s taking full advantage. Just in the last quarter, the company’s day rate jumped to $46,600 a day from $27,000. Cramer’s predicting those numbers will go even higher.

Those spot rates, or contracts set at current market prices, are important because they determine a tanker company’s dividend distributions and, ultimately, how the stock performs. Nordic American, who counts among its clients Exxon Mobile, BP and Chevron, upped its dividend to $1.18 a share after Monday’s earnings report, putting the implied annualized yield at about 11%. If NAT’s day rates climb to $70,000, and Bear Stearns thinks they could, the yield pops to 22%, or a dividend of $2.00 a share, with the stock price at present levels. The larger payout should attract more investors. At least, that’s what Cramer’s expecting. And the newfound enthusiasm for NAT should drive up the stock price.

What are the caveats? Nordic American missed its earnings expectations when it reported Monday. But Cramer seemed more concerned with those ever-increasing day rates. As they climb higher, so should NAT. The other worthwhile note is that only three of the 10 analysts that cover this stock deem it worthy of a “buy” rating. But again, Cramer seemed unconcerned. There’s such high demand for so few tankers, this environment is extremely favorable to NAT.

Jim's charitable trust owns BP.

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