The Boeing Company (BA), Star Scientific, Inc. (STSI): Why Did My Stock Just Die?

Certainly, supply is one component of the collapse in rates, but another not often discussed is the degradation of global trade, particularly in the Asia-Pacific region. Japan slowed to just 0.2% GDP growth in the fourth quarter of 2012, and for all the talk of China’s strength, the Federal Reserve suggests that growth there could come to a screeching halt with less than 1% growth by 2030.

In December, Frontline canceled its long-term charter with Ship Finance International Limited (NYSE:SFL) for two ships, and Nordic American was told that nine Suezmax vessels it had in a pool would be withdrawn so it could be more flexible. Yet Nordic continues to look for expansion opportunities and two weeks ago acquired its 21st Suezmax tanker, which should be delivered next month. It says it believes it can increase its dividend and earnings capacity through further expansion.

It seems the shipping industry hasn’t learned anything, then, and that means there will be additional fleet operators heading down to Davy Jones’ locker. I’d say it’s not yet time to climb aboard Nordic or any of the other shippers until they reverse course.

The article Why Did My Stock Just Die? originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey and The Motley Fool have no position in any of the stocks mentioned.

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