Boosted by rising crude oil prices, seaborne transportation leader Frontline (FRO) just generated its largest Q2 profit since 2008. That has FRO stock laying down a direct pipeline to a buy zone, with the company paying a dividend with an eye-popping 18.3% yield on an annualized basis.
Listed on both the New York Stock Exchange and Oslo Stock Exchange under the symbol FRO, Frontline owns and operates one of the largest oil tanker fleets in the industry. The fleet ranges from the large VLCC-class ships and medium-size Suezmax tankers to smaller tankers.
Labeling itself a “cash machine” in its Q2 presentation, Frontline generated $230.7 million in profit last quarter, enabling a cash payout of 80 cents a share.
After posting four quarters of triple-digit or higher EPS growth based on prior-year quarters that showed a loss, the oil transporter continued its rebound in Q1. On Aug. 24, Frontline reported earnings per share of 94 cents, an impressive 327% year-over-year gain.
Wall Street forecasts a 74% EPS gain for the full year to $2.77 per share.
Frontline has also fueled impressive top-line growth. After three straight quarters of triple-digit sales growth, revenue slowed to $512.8 million, a still-impressive 71% gain over the prior-year quarter.
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Rising Oil Prices Propel FRO Stock Toward Buy Point
Rising oil prices have lifted the energy sector and its related industry groups to the top of the rankings in MarketSmith. Energy-Coal, Oil & Gas-Field Services and Oil & Gas-Machinery/Equipment hold the top three spots.
FRO stock hails from the Oil & Gas-Transportation/Pipeline group, sharing top billing with Euronav (EURN) and Teekay Tankers (TNK). All three oil & gas stocks sport the highest-possible 99 Composite Rating.
Frontline’s A- Accumulation/Distribution Rating and 1.6 up/down volume ratio highlight clear institutional demand for FRO stock. Plus, 22 funds with an A+ or A rating own shares of Frontline.
As the market indexes look to emerge from choppy seas, FRO stock has weathered the storm well, as reflected in its rising relative strength line.
While not unscathed by the market correction, several days of heavy upside volume have propelled Frontline back above its 50-day moving average as it forms a handle. FRO stock now is now testing an 18.75 buy point in the cup-with-handle formation. The handle is 15% deep, which is more than ideal.
On Friday, FRO stock bubbled up to explore a new buy zone in rising and above-average volume. It closed the week just pennies shy of the 18.75 buy point.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.