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Marine transportation provider Omega Navigation Enterprises Inc (ONAV) reported an adjusted third-quarter profit that handily beat estimates, helped by term employment of its vessels. The company said its vessels employed through term time charters has enabled it to present profitable operating results, even in these uncertain times and depressed tanker market. "While rates remain somewhat depressed, we believe we are now seeing some signs of a rebound in demand for oil products which should help stimulate rates going forward," Chief Executive George Kassiotis said in a statement.

Omega Navigation has fallen from grace since its IPO in April, 2006 at $16.00 per share. The management team decided to pay a hefty dividend of $0.50 per share all the way through February, 2009. Management stubbornly paid this dividend even though shipping rates plummeted, along with revenues, during the financial crisis of 2008 and the corresponding drop in crude oil prices.

This shows that the management may have been out of touch with reality during the crash. To correct matters they will need to show steady profits during normal times and eventually bring back a more reasonable dividend. I personally would suggest bringing it back mid-2010 as a dime or even a quarter depending on shipping rates, and liquidity position.

The price hit a 52-week low at $2.63 this past week before earnings were released; likely from fear regarding their earnings, the lack of communication from the Greek management in general, and fear of further fallout if the whole Greek economy goes belly-up.

Having said that, I think this news is appropriately priced in and with the earnings release and the confident tones from management I think this is a buy here below $3.00. There is no reason that the company shouldn't keep earning a profit and managing their assets more wisely, and the potential of a resurrected dividend (albeit lower most likely), adds icing to the cake of this potential double. (52 Week high is $8.20).

Disclosure: Author holds a long position in ONAV

Source: Omega Navigation: Clear Seas Ahead