Are Investors Missing the Boat on This $7 Shipping Stock?

It's one of my favorite under-the-radar value plays... [Shield] AN OXFORD CLUB PUBLICATION [Wealthy Retirement]( [View in browser]( SPONSORED [500% REAL MONEY Gain In Less Than 2 Hours?!?!]( [Top Trades in DPL]( Last month, millionaire trader Nate Bear closed a rarely seen 500% gain within just 2 hours. (Enough to turn $1,000 into $6,000!) But that wasn't his only big, fast winner - in fact, he's booked forty-nine 100%+ winners since last March! How does he do it? See for yourself during a special "Open House"... FOR FREE! [Click here to RSVP for Nate Bear's special FREE Open House >>]( Editor's Note: As I write this, the market is down 3.6% just in the last eight days... Is that cause for concern, or is it merely a healthy correction? My colleague Nate Bear over at Monument Traders Alliance is hosting a [FREE "Open House"]( all next week to help traders answer that question and teach them his [system for finding winning trades](. (Nate once turned $37K into $2.7 million in verified trading profits in just four years, so I put a lot of stock in what he has to say.) [Go here to register for Nate's free Open House!]( - James Ogletree, Managing Editor [THE VALUE METER]( [Are Investors Missing the Boat on This $7 Shipping Stock?]( [Anthony Summers, Director of Trading, The Oxford Club]( [Anthony Summers]( It's not every day you come across a stock that looks as deeply undervalued as Teekay (NYSE: TK). The marine shipping company has been one of my favorite under-the-radar value plays for a while now. And given its stock chart, I'm sure its shareholders have felt much the same way. [Chart: ]( [View larger image]( After a more than threefold rise from mid-2022 to February of this year, the stock has come down about 20% from its high. Even so, I'm more convinced than ever that the market is missing the boat here. Let me explain. To start, consider Teekay's valuation. The company currently trades at an enterprise value-to-net asset value (EV/NAV) ratio of just 0.74. To put that in perspective, the average EV/NAV for similar companies - companies with positive net assets and four consecutive quarters of positive free cash flows - is 6.8. That makes Teekay exceptionally cheap. In simpler terms, if you wanted to acquire Teekay and all of its ships and other assets today, you'd have to pay only $0.74 on the dollar, whereas its most comparable peers would cost you more than nine times as much. But a cheap price alone doesn't make a stock a screaming buy. After all, plenty of lousy businesses trade at steep discounts to book value. The real key is finding a company that's both inexpensive and consistently generating cash. And Teekay fits the bill. [Chart: ]( [View larger image]( Over the past four quarters, the company's free cash flow averaged a whopping 9.8% of its net assets. The average for companies with four straight quarters of positive free cash flow was just 8.6%. So not only is Teekay dirt cheap... it's also consistently generating cash flows at a higher clip than average. How is Teekay pulling this off while many of its shipping peers tread water? Two words: Teekay Tankers. Teekay Tankers (NYSE: TNK), of which Teekay is the majority stakeholder, has proven to be a gold mine amid the recent tanker market boom. With spot fleet rates for its Suezmax and Aframax tankers soaring in Q4 to $37,000 and $45,000 per day, respectively, Teekay Tankers saw its revenue jump 10% over the previous quarter to $313.3 million, while net income surged 37% to a record $111.7 million. Teekay, the parent company, has been milking this cash cow to line its own coffers. It received $2.4 million in cash distributions from Teekay Tankers in Q4 alone and $17 million for the full year. As a result, its own bottom line has been fattening up quite a bit. But, as always, we must consider how the stock fits into the broader context. There's no shortage of geopolitical news around the world that could have a significant influence on Teekay and the shipping industry as a whole. How much should that factor in to Teekay's valuation? [Get My Value Meter Rating Here]( [2024 Private Wealth Seminar at the Wequassett Resort & Golf Club in Harwich, Massachusetts on October 7-8, 2024]( SPONSORED [A New Crude Oil Supercycle Is Underway]( [Crude Oil Supercycles]( Goldman predicts a new energy "supercycle"... and says all-time highs in oil demand are coming. One JPMorgan analyst forecasts $150 per barrel. Don't be distracted by the inevitable dips and fluctuations! This easily could be the greatest oil bull market since the 1970s. 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