Dorian LPG is Thursday's IBD Stock Of The Day as the liquefied petroleum gas shipping company bumps up against a buy point. Despite rough seas for the market over the past month, LPG stock has been steady as she goes.
A Very Large Opportunity
The Connecticut-based company operates 25 very large gas carriers, or VLGCs, that have a younger and more environmentally friendly profile than the global fleet.
The Time Charter Equivalent, or TCE, rate per day is a key metric. The TCE rate soared 44.7% from a year ago to $76,337 in the December quarter. That helped fuel a 58% jump in revenue to $163.1 million in the quarter, as earnings per share more than doubled to $2.62.
However, TCE spot rates plunged at the start of 2024, though much of current-quarter bookings came when rates were still elevated, management said in the Feb. 1 earnings call. For the March Q4 quarter, analysts expect EPS to rise 20% to $2.33. But analysts expect a 29% pullback in earnings per share to $5.59 for fiscal 2025.
Still, Dorian says it's upbeat about the long-term fundamentals for the LPG market and also for the potential of ammonia transportation. That's why the company announced an agreement for the production of a Very Large Gas Carrier/Ammonia Carrier to be delivered in the fall of 2026.
Several factors support the outlook, according to Dorian's latest presentation. Asia, which accounts for nearly 60% of U.S. LPG exports, is expected to continue to be a favorable source of demand, with 9% growth this year, led by China and India. Meanwhile, U.S. prices should remain attractive, with healthy inventories enabled by warm winters and the expansion of natural gas processing.
Dorian LPG Stock Action
Dorian LPG stock rose 3.1% to 42.37 in Thursday stock market action. In intraday action, the shares briefly edged past a 42.75 buy point from a cup-with-handle base that stretches back to its early-January peak.
Dorian LPG went on a huge run last year, speeding to a 131% gain as TCE prices powered higher. Now, having come down as much as 33% from its Jan. 5 peak, the latest advance is slower but impressively steady.
LPG stock is on the verge of stringing together 10 weekly gains out of the past 11 weeks. Three of those weekly gains during March were no more than 1.1%, making for a four-weeks-tight pattern that coincided with a move past its 10-week moving average. LPG cleared that tight formation with gusto on April 1, flashing an early entry opportunity.
While Dorian LPG has remained in low gear since then, its Relative Strength line, the blue line in IBD charts that tracks a stock's progress vs. the S&P 500, has kept moving higher amid the market correction.
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