Download Navios Maritime Stock Opportunity for Strong Quarterly Return

Navios Maritime Stock Opportunity for Strong Quarterly Return
Navios is another MLP with parent company owning 55% and strong quarterly financial
reports in 2015.
Navios has long term contracts with two customers keeping all 6 ships fully employed
and positive a cash flow.
The dividend is up over last year, reflecting continuous employment and higher earnings
and profit margins.
The investment opportunity meets our criteria for our 90-day strategy and strong
double-digit returns for this quarter.
Navios Maritime Midstream Partners LP (NAP) is a master limited partnership that
owns and operates 6 very large crude oil tankers under long-term employment contracts
with international oil companies, refiners, and large vessel operators.
The Nave Celeste provided by Vesseltracker.com
Picture here
Navios Midstream’s parent company is Navios Maritime Acquisition Corporation (NNA)
which currently owns a 55.5% interest in Navios Midstream as well as a 2.0% interest
through the general partner which Navios Maritime Acquisition Corporation owns and
controls.
The company has these ships chartered to two strong customers: a Chinese stateowned enterprise Cosco Dalian, which is wholly owned by the COSCO Group, and
Formosa Petrochemical, a Taiwan Stock exchange-listed company. For the nine-month
period ended September 30, 2014, these two customers accounted for 77.9% and
22.1%, respectively, of NAP revenue.
This investment meets our 90-day cyclical investment strategy. We have talked about
this cycle previously, and we employ this strategy on several other companies with
great success. The 90-day cycle is a cycle that tracks the stock price going up just prior
the ex-dividend date. This is the high point in the cycle, where we recommend a sale of
your holdings in the company. After the ex-date the stock price drops, significantly, to
allow a great buy-in price for the next upswing. During the low part of the cycle is where
we recommend a buy in price, and hold until just prior the next ex-date.
The stock price closed the day prior its last ex-date on November 5, 2015 at $14.02,
and since has dropped to close on November 24 at $11.60 (that is a $2.42 drop in stock
price. This dividend was only $0.38). Last quarter (3Q, 2015) the ex-date on August 4
and with a close on August 3 of $14.94, and the price dropped to a low on September
29 of $10.92 and closed that day at $11.10. With the current drop to $11.60 we could
anticipate the stock price to climb back into the upper $14 range. If we see a $3
increase that would create a return for the quarter of 25% (my example would buy at
$11.60 and sell at near $14.75 – fair expectation. $14.75 - $11.60 = $3.15 profit per
share. That equates to near 27% return for this quarter.) We do not try to overstate
numbers, just use near last quarter actual numbers to display our example.
During 2Q, 2015 the dip was not so big, but did drop some and rebounded at the exdate. 1Q, 2015 displayed a drop of over $4. during the quarter. With the current price
down, we are confident the stock price will recover leading to this ex-date.
The dividend has increased over time as well, with the dividend in October 2015 at
$0.38, in July at $0.40, May at $0.38 and January at $0.22. During 2014, the dividend
was between $0.12 and $0.227. A significant jump from year-to-year.
Recommendation: This is a very good opportunity. We will be watching for a good buy
in point and recommend a buy when the stock price drops below $11.25. There is no
rush to buy in early, as the stock price may continue lower. There will be dips in the
market over the next month or so, so investors can be picky and find a great buy in
point to pad their investment. There are no negatives reported by the company or in the
market place, and with time on your side, you have the opportunity to watch and time
your buy.