April 7, 2015

VALUATION WATCH: Overvalued stocks now make up 58.39% of our stocks assigned a valuation and 20.03% of those equities are calculated to be overvalued by 20% or more.  Twelve sectors are calculated to be overvalued--with three at or near double digits.

--A Full Tank

Oil Shipper TeeKay Tankers Up by Double Digits for VE Portfolios

Teekay Tankers Ltd. (TNK) is a Marshall Islands corporation recently formed by Teekay Corporation to provide international marine transportation of crude oil. Teekay Tankers Ltd. owns a fleet of nine double-hull Aframax-class oil tankers, which an affiliate of Teekay Corporation manages under a mix of spot-market trading and short- or medium-term fixed-rate time-charter contracts. In addition, Teekay Corporation will offer to Teekay Tankers Ltd. within eighteen months of the initial public offering the opportunity to purchase up to four Suezmax-class oil tankers. Teekay Tankers Ltd. intends to distribute on a quarterly basis all of its cash available for distribution, subject to any reserves established by its board of directors.

TeeKay was a selection for several of our portfolios this month and it is currently up more than 10% since our latest round of rebalancing. The stock is currently trading above its 20-Day SMA and analysts have upped the earnings estimates in recent weeks. The company also has a quarterly dividend payment--$0.03/share--which is available to shareholders of record as of April 17th.

Teekay is positioned well within the industry, as it focuses on very large crude carriers and "Suezmax" carriers. The bigger ships are preferred to older ships-- and it can be tough to purchase used ships suitable for the business. This is because with falling oil prices, there is a higher demand for onboard storage of crude as speculators wait for more favorable conditions.

Thus, while a leading world economic indicator such as dry bulk shipping--as tracked by the Baltic Dry Index (BDI)--may be in a downturn, conditions are favorable for crude oil shipping companies with lots of big tankers. In addition, demand in the East means that more crude is moving from the Atlantic to the Pacific-- which is also helpful for companies such as TeeKay. If we take a look at the broad range of factors that effect a bulk-crude shipper's potential earnings, we find that TeeKay is well-positioned within almost every facet of the business.

One of TeeKay's Massive Oil Tankers

Several analysts have recently upgraded TeeKay from Buy to Strong Buy. At ValuEngine, we continue our STRONG BUY recommendation. Based on the information we have gathered and our resulting research, we feel that TEEKAY TANKERS has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Momentum and P/E Ratio.

As a bonus to our Newsletter readers,
we are offering a FREE DOWNLOAD of one of our Stock Reports

Read our Complete Detailed Valuation Report on TeeKay Tankers HERE.

Below is today's data on TNK:

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	6.23	1.37%
3-Month	6.12	-0.49%
6-Month	6.25	1.55%
1-Year	7.16	16.50%
2-Year	5.73	-6.91%
3-Year	3.49	-43.17%

Valuation & Rankings
Valuation	34.40% undervalued	Valuation Rank(?)	93
1-M Forecast Return	1.37%	1-M Forecast Return Rank	100
12-M Return	69.89%	Momentum Rank(?)	96
Sharpe Ratio	-0.31	Sharpe Ratio Rank(?)	27
5-Y Avg Annual Return	-15.68%	5-Y Avg Annual Rtn Rank	26
Volatility	50.09%	Volatility Rank(?)	34
Expected EPS Growth	51.06%	EPS Growth Rank(?)	77
Market Cap (billions)	0.44	Size Rank	55
Trailing P/E Ratio	13.09	Trailing P/E Rank(?)	85
Forward P/E Ratio	8.66	Forward P/E Ratio Rank	93
PEG Ratio	0.26	PEG Ratio Rank	76
Price/Sales	1.86	Price/Sales Rank(?)	49
Market/Book	1.34	Market/Book Rank(?)	68
Beta	2.30	Beta Rank	8
Alpha	0.25	Alpha Rank	90

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