STNG - TORM Stock Is Still Cheap And Well Positioned

2024-05-01 03:43:54 ET

Summary

• TORM plc's stock has risen by 62.64% since I upgraded it to "Buy" in July 2023. But it's still undervalued and well positioned, in my view - read on.
• The product tanker market is expected to experience increased demand and a decrease in supply, leading to favorable conditions for maintaining high rates.
• TORM's financial position and dividend payout coverage should remain strong for at least the next 2 years.
• Despite its higher valuation compared to peers, TORM plc presents a substantial total return potential, with my calculations suggesting an upside of 18%, not counting the 16.5% dividend yield.
• I therefore reiterate my previous "Buy" rating.

Intro & Thesis

Since I upgraded the shares of TORM plc ( TRMD ) from "Hold" to "Buy" in mid-July 2023 , they have risen by of 62.64% (dividends included), significantly outperforming the broad market. Since my last update in January 2024 , the stock has risen by 9.8% - and it continues to grow:

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