Protected Principal Retirement Strategy: Uff Da!

by: Akaralph

Uff da! This term has always interested me, particularly since my wife is of Scandinavian origin. It can mean pretty much anything - surprise, astonishment, relief, exhaustion and, sometimes dismay.

Within the context of this article, which focuses on three smaller cap Scandinavian (Norwegian) stocks, I will select the "surprise" meaning of Uff da! in the hope that one or more of these might play out profitably going forward.

Before delving into these stocks I wish to caution readers that these would come under the heading of "speculative," and although each is a dividend payer, only one is of significant size.

Kvaerner SA (OTC:KVAEF)

Based in Fornebu, Norway, Kvaerner provides design, engineering and construction services for offshore drilling platforms and onshore plants. It is the largest of the three firms profiled in this article with over 2,700 employees and a market cap approaching one billion dollars.

For the past twelve months, revenues were $1.9 billion and their return on equity was just under 12 percent. Earnings will be released for the current quarter in early February, and analysts are looking for both top and bottom line increases.

Over the past twelve months, Kvaerner's stock price has appreciated approximately 71 percent, and 35 percent over the past six months.

Analyst estimates for 2013 project that the price per share will increase 24 percent.

On January 10, Kvaerner had its Capital Markets Day, and the following information was presented:

  • Current backlog is $4 million USD.
  • 2013 revenues are forecast to be $2.3 billion USD.
  • 30 - 50 percent of profits to be paid as dividends.
  • Target is a 10 percent dividend increase per year.
  • Dividends are paid on a semi-annual basis.
  • In October 2012, Kvaerner paid a dividend of $.096 USD.
  • Anticipated dividend to be paid in April 2013 is $.10 USD.

Northern Offshore Ltd. (OTCPK:NFSHF)

Northern Offshore is a Bermuda corporation whose stock trades primarily on the Oslo exchange. It provides contract drilling equipment and operational services (including rig management) to offshore oil and gas companies. It is active in the Mediterranean, Indian Ocean, SE Asia and the North Sea.

After declining in the first six months of 2012, the stock price is up a little over two percent recently.

In the quarter ended September 2012, revenues increased by 69 percent and earnings were up by 6843 percent to $.12/share. The semi-annual dividend was increased by 25 percent to $.05 USD. The full year dividend is estimated at $.108 USD.

Analysts following Northern Offshore rate it as "outperform" with a near-term price target of $3.00.

Earnings guidance issued by the company estimates 2013 annual earnings to range between $.27 and $.32 per share, and for 2014 between $.36 and $.46 per share.

S.D. Standard Drilling Plc. (OTC:SDSDF)

Standard Drilling is what I would consider a development stage company, engaged in the construction and sales of jack-up offshore drilling rigs. The company is incorporated in Cyprus and trades primarily on the Oslo exchange. The rigs that it sells have a drilling depth capacity of 30,000 feet.

The company has recently completed the sale of two rigs and have two others scheduled for delivery in late 2013 and early 2014.

For the quarter ended September 2012, Standard Drilling earned $.06 USD versus a loss of $.01 USD in the third quarter of 2011. Total profit for the quarter was $14.4 million USD, and the company held $249 million USD in cash.

Dividends are paid semi-annually, and the interim dividend declared for payment on January 3, 2013 was $.14 USD.


I have always been partial to Norwegian companies - I believe the Norwegian economy to be one of the most solid in Europe, and the energy companies trading on the Oslo exchange seem to perform well.

That said, I will again caution that all three of these companies are relatively small caps, and that more research is needed before I would be willing to add one, or more to the Protected Principal Retirement Strategy portfolio's foreign stock allocation.

Kvaerner, with an annual yield approximating 11 percent, and being the largest of the three bears the closest monitoring. I am also intrigued by Northern Offshore, based upon its earnings guidance. At this time I would rank Standard Drilling last on the list, pending the results they will post over the next few quarters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article does not constitute a buy or sell recommendation for any of the stocks mentioned.