Why Scorpio Tankers Stock Popped 10% Today

0
212

Sharp Credit – Credit News – Credit Information

What happened

Shares of up-and-coming refined petroleum products transporter Scorpio Tankers (NYSE: STNG) jumped in Thursday trading, closing the day up 10.3% after analysts at B. Riley FBR announced they were adding the stock to their “Alpha Generator List.”

FBR already had a buy rating on the stock so couldn’t really upgrade it any more than it already had. In adding it to FBR’s internal list of stocks expected to generate “alpha” (above-average profits), though, the analyst basically did the next best thing.

Red oil tanker at sea.

Image source: Getty Images.

So what

Why give any more kudos to Scorpio at all? According to SeekingAlpha , the reason is that the macroeconomic environment for oil shippers is improving, with demand on the rise (with rising oil prices ) but a “declining pace of new shipbuilding” to supply this demand.

Now what

Economics 101 teaches us that rising demand against a backdrop of flat supply is likely to result in rising prices — prices that should benefit Scorpio Tankers as an incumbent operator of oil tanker vessels.

FBR is predicting this will result in rising profit margins and free cash flow for Scorpio — which would be a good thing for shareholders, given that Scorpio has spent the last three years straight losing money.

10 stocks we like better than Scorpio Tankers
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Scorpio Tankers wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



Original Source