oil transportation industry

**bdcmm** Mon Feb 28, 2005 12:09 pm

oil transportation industry
Blast,

What's your view on oil transportation industry? It seems to me that the shipping rates will remain high due to the high oil price and strong demand from China/India.

One stock FRO was mentioned in CEI board, and FRO's numbers look great - with a trailing PE at a bit more than 4, and forward-looking dividend payout a bit more than 20% in 2005 at the current price level.

Kind of hard to resist to buy.

Thanks in advance for your opinion.

**blast_investor** Mon Feb 28, 2005 12:37 pm

Shipping business is very good. But shipper's stocks are not cheap.

The numbers are not that cheap if you consider ship's cost. Ship wearout pretty quick and replacement cost are something you have to add on.

I would stay away. I am not fan of FRO or similar stocks just because of those low PE or high dividend rate.

If you believe oil shipping rate can go much higher from here, FRO can still go higher.