Top Oil Tanker Stocks for Q2 2023

TNP, LPG, and TRMD lead the pack for value, growth, and momentum, respectively

Suriyapong Thongsawang / Getty Images

Leading oil tanker stocks this quarter include TORM PLC, Teekay Tankers Ltd., and Ardmore Shipping Corp., which have each climbed by more than 100% in the last year amid a broad rally following Russia's invasion of Ukraine last year.

There is no unique benchmark for the oil tanker industry. However, oil tanker stocks may—though not always—exhibit similar performance to companies operating within the energy sector. Energy stocks, as represented by the Energy Select Sector SPDR ETF (XLE), have provided a total return of -5% over the past year, while the Russell 1000 Index has returned 3% in the same period.

Here are the top three oil tanker stocks with the best value, fastest growth, and most momentum. The market performance numbers above are as of May 14 and all statistics in the tables below are as of May 2, 2023.

These are the oil tanker stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Source: YCharts

These are the top oil tanker stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

Source: YCharts

These are the oil tanker stocks that had the highest total return over the last 12 months.

Source: YCharts

Oil tanker stocks typically benefit when supply outstrips demand, creating more crude to transport and store. For example, the sector posted solid gains during the early stages of COVID-19, when oil demand suddenly plummeted as economic activity reached a standstill. As a result, energy producers and refineries turned to oil tankers for storage solutions, pushing up their share prices.

Reduced demand and excess supply also lower oil prices, resulting in declining bunker fuel costs for oil tanker companies. Lower operational costs help companies in the sector boost their bottom line, which may benefit their share prices. Conversely, high fuel costs can weigh on earnings when oil demand surpasses supply.

Finally, a demand/supply imbalance can benefit oil tanker stocks through contango—a situation where the current oil spot price drops below its future price. This encourages companies to purchase the commodity in the spot market and store it to sell at a later date, hence creating higher demand for transportation and storage.

Oil Spills: Oil spills can lead to considerable economic losses for oil tanker companies and cause significant reputational damage. Not only could the company responsible for the accident be liable for cleanup and compensation costs, but it would also face a substantial increase in insurance premiums. Perhaps the most infamous oil tanker spill occurred in 1989 when the Exxon Valdez ran aground on Prince William Sound's Bligh Reef in Alaska. The accident cost Exxon Mobil Corporation (XOM) over $5 billion in cleanup costs, fines, penalties, and claims.

Geopolitical Tensions: Oil tanker stocks face potential challenges from geopolitical flare-ups that could disrupt global shipping lanes. For example, in 2019, Iran seized two oil tankers in the Strait of Hormuz amid heightened tensions between Tehran and Washington. The incident temporarily disrupted shipping through the waterway, which carries around 19 million barrels of crude and other petroleum products daily.

Investor's Business Daily. "This Industry Quietly Emerges As Leader Thanks To Several Fast-Rising Stocks."

YCharts. "Financial Data."

Ardmore Shipping Corp. "Ardmore Shipping Corporation Announces Financial Results For The Three Months Ended March 31, 2023."

Dorian LPG Ltd. "Dorian LPG Ltd. Declares Irregular Cash Dividend of $1.00 Per Share and Announces Third Quarter Fiscal Year 2023 Financial Results."

Euronav NV. "EURONAV ANNOUNCES FIRST QUARTER 2023 RESULTS," Pages 1-2.

Teekay Tankers Ltd. "TEEKAY TANKERS LTD. REPORTS FIRST QUARTER 2023 RESULTS," Page 1.

Barron's. "Oil Tanker Stocks Jump as Storage Crunch Leads to a 'Bonanza' for Ship Owners."

Treehugger. "The Exxon Valdez Oil Spill: History and Impact."

The Guardian. "Iran Stokes Gulf Tensions by Seizing Two British-Linked Oil Tankers."