For immediate release
Chicago, Illinois – June 23, 2022 – Today Zacks Investment Ideas presents the highlights of Scorpio Tankers Inc. STNG.
Supply chain deviation: Why supply growth still has its legs
We heard a general opinion echoed by the CEOs of megabanks, retail retailers and even Fed members about the current macroeconomic environment. Inflation will continue and the problems in the supply chain that plague the globe will not magically disappear. Just as the problems that have led to our current difficulty over the years, solutions that stimulate demand and slow the economy will manifest themselves over time.
This is good news for shipping companies, as they may charge higher prices and pass on higher costs of doing business. Companies pay a premium to transfer consumer goods, and the foreseeable future for the shipping industry looks bright. The Zacks Transportation – Shipping industry includes 43 companies that can benefit.
This industry is currently ranked in the top 13% of over 250 industrial groups. As it is ranked in the top half of all Zacks Ranked Industries, we expect this group to perform more over the next 3 to 6 months. If we dig a little deeper, the Zacks Transportation – Shipping industry returned + 25.65% this year against a loss of -20.84% for the S&P 500. Despite the huge rise in prices, this group is still relatively undervalued.
The industry also boasts a large number of shares of Zacks Rank # 1 (Strong Buy) and # 2 (Buy), which serves as another signal to confirm that the group is experiencing positive earnings revisions. Let’s take a look at a company that trades near new heights in particular. Simply put, stocks that hit new highs in large volumes are a sign of strength.
Scorpio Tankers Inc.
Scorpio Tankers is engaged in the maritime transport of refined petroleum products through global shipping markets. STNG boasts a remarkable fleet of more than 120 hired tankers. Its vessels transport petroleum products and crude oil to integrated oil companies, oil traders and other customers. Scorpio Tankers was established in 2009 and is based in Monaco.
STNG surpassed earnings forecasts for seven of the last nine quarters. The shipping company delivered a surprising average profit for the fourth quarter of 12.26%. Shares have responded well and have already risen nearly 180% this year. It seems that the cycle is not over, as just yesterday STNG made a new peak for the year.
For the current quarter, analysts have increased their forecasts for EPS by an astonishing 1321% in the last 60 days. Zacks’ consensus estimate for the second quarter is now $ 2.32 per share, a potential growth of 346.81% over the same quarter last year.
What the Zacks model reveals
Zacks Earnings ESP (Expected Surprise Forecast) identifies companies that have recently witnessed positive activity in the revision of earnings estimates. The idea is that this newer information will serve as a better predictor of the future, giving investors a leg up during the profit season. Combining Zacks Rank # 3 or better with a positive earnings ESP, stocks caused a positive surprise 70% of the time according to our 10-year test.
With an ESP of + 11.5% profit and a Zacks # 2 rank (Buy), another hit of profits could be in the cards for STNG investors.
With clear skies and wind in the back, be sure to add STNG to your watch list.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is provided for informational purposes only and does not constitute investment, legal, accounting or tax advice or a recommendation to buy, sell or hold a security. No recommendations or advice are given as to whether an investment is suitable for a particular investor. It must not be assumed that any investments in securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the current date and is subject to change without notice. Any views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market management or asset management of any securities. These returns are from hypothetical portfolios consisting of stocks with a rank of Zacks = 1, which were rebalanced monthly with zero transaction costs. These are not the returns on actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information on the performance numbers shown in this press release.
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