Monday, April 18, 2011

Frontline Ltd. (NYSE: FRO) Q2 2011 Price Target

Recent price: 22.51$
P/E Ratio: 10.86
3 Months Target Price: 27.50$

Company Description
According to Reuters' data, Frontline Ltd. is a shipping company. The Company is engaged primarily in the ownership and operation of oil tankers and oil/bulk/ore (OBO) carriers, which are configured to carry dry cargo. It operates oil tankers of two sizes: very large crude carriers (VLCCs), which are between 200,000 and 320,000 deadweight tons (dwt) and Suezmaxes, which are vessels between 120,000 and 170,000 dwt. It operates through subsidiaries and partnerships located in the Bahamas, Bermuda, the Cayman Islands, the Isle of Man, Liberia, Norway, the United Kingdom and Singapore. It is also involved in the charter, purchase and sale of vessels.

Confidence Margins
Strong resistance $33.95 (+51%)
Light resistance $27.51 (+22%)
Light support $22.33 (-1%)
Strong support $20 (-11%)

Since reporting it's results for the fourth quarter of 2010, Frontline Ltd saw it's share price steadily go down following the CEO's grim comments about the state of the industry for the coming quarter. current price levels are a good entry point to acquire shares of a company with a good historic operating performance.

Entry strategy
For the cautious investor:
Buy the stock for 23$ or less.

For the risk-taking trader:
The August 2011 23$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 155$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 27.50$, or keep it until 33$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 27.50$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

No comments:

Post a Comment