Cramer is still a big fan of Nordic American Tanker, today calling it his favorite stock in the shipping group. It’s the balance sheet about which he’s most excited – virtually no debt and $600 million in cash – and it’s the reason he has stuck by the company when the industry as a whole seemed to be on the decline. On Monday’s Mad Money, Nordic American CEO Herbjørn Hansson reinforced Cramer’s bullish feelings toward the stock.
Hansson expects a great upcoming quarter, thanks to a strong market for his ships. NAT said as much in a letter to shareholders just last month. The strong balance sheet means that Hansson can buy up struggling competitors on the cheap. And best of all, the dividend is safe. So investors can forget about a cut.
“There is no question on that,” the CEO said.
NAT has been enjoying the benefits of the contango trade, which is the buying of oil at cheap prices, storing it in the company’s tankers and then selling at a higher price. Just because oil has crossed the $50 mark doesn’t mean that trade is done. Many of NAT’s clients think that crude prices will go higher still, so they’re not selling off their tanker stores just yet.
Some haven’t thought oil’s recent move was legit, saying it was artificial or even dollar-related, but Hansson is bullish regardless. China is the main reason. That country’s move from bikes to cars is a sign of growing consumption that isn’t about to slow anytime soon.
So “even though we may see some recessionary tendencies,” Hansson said, “they will not go back to the bicycles.”
Hansson also pointed to “very strong readjustment forces at work” that have slowed the massive ship build-out his industry had seen. The glut of tankers had devalued NAT’s own fleet. But with that trend gone for now, and the company’s strong balance sheet, NAT is much better off than its rivals.
“When the others have water up to their cheeks,” Hansson said, “we are barely wet on our toe.”
Cramer stayed with his original call: NAT’s a buy.
Questions for Cramer? firstname.lastname@example.org
Questions, comments, suggestions for the Mad Money website? email@example.com