Relatively staid Greek shipper Tsakos Energy Navigation
Tsakos and competitors Stelmar Shipping
The fear of overcapacity, the bane of the shippers in the past, should remain muted for years. There is limited shipyard capacity to produce new ships. Regulators, who have been trying for years to force older ships into retirement, are being helped by an unexpected event -- unusually high scrap metal prices. In a word, the business climate for shipping companies is "marvelous."
With every investment, there are shoals to navigate. For Tsakos, that would be $475 million in debt. The upside is that this debt produced a fleet of ships with an average age of 7.1 years compared to an average 12.8 years for the world's tankers. The company plans to grow further, from today's 28 vessels to 41 in 2007, but as long as earnings are sufficient to allow debt-to-equity levels to at least stay level, investors should not be concerned.
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Fool contributor W.D. Crotty owns stock in ChevronTexaco.