Scorpio Tankers: Value In A Distressed Sector

Scorpio Tankers Inc. (NYSE:STNG) presents an interesting value opportunity. On one hand the company is undervalued and churning out profits in an industry that is generally losing money, plagued by overcapacity, low day-charter rates and vicious competition, (it has been known for a customer that sees a port full of empty tankers to bid the ship owner down). On the other hand, the company is aggressively building its fleet, buying up as much as 60% of the global manufacturing capacity to build suezmax long range tankers up to 2016 and recently placing an order for 4 LNG tankers, which are currently in demand and have seen their day charter rates almost double since the beginning of the year.