Speaker: Stock Watch is brought to you by National Eagles and Angels Association, and now Stock Watch.
George Jarkesy: That's right; it's time for Stock Watch. I've got the Chief Analyst of National Eagles and Angels, Clay Mahaffey joining me. Clay welcome to the show.
Clay Mahaffey: Hi George, how are you doing?
George Jarkesy: Fantastic. I'm looking forward to seeing you tomorrow at the National Eagles and Angels luncheon. I'm going to be there, you're going to be there, my co-host Dwayne Deslatte will be there. We've got a couple of hundred members who will be there. It is a great event and you are going to be sharing all of your market wisdom with the members tomorrow.
Clay Mahaffey: George, let me follow up on one thing Harry Dent was saying. There may be $42 trillion dollars in private debt, but the equity of our country is greater than that. He is picking a debt number, it's a big number but the entire U.S. population has a positive net worth.
George Jarkesy: Yes, I have heard estimates that the net worth of Americans as a whole is over $300 trillion so $42 trillion on a debt to equity ratio wouldn't be that bad.
Now when I think about it though from a servicing debt standpoint, if you think that we are doing about $15 trillion in GDP, and let's say earnings on that GDP are $3 trillion, all right. So now, you have debt of $42 trillion with about $3 trillion of taxable income. If interest rate on that $42 trillion is only 3%, then you probably are in good shape. If the interest rates though, because of all this quantitative easing and printing of cash and excess risk were to go to 7% on $42 trillion we would be in real trouble. So, that's something to keep in mind.
Clay Mahaffey: Okay George, this is a great little story. Teekay Tankers, Limited. (TNK), is trading around $5.20. I like this company for the high dividends. They have a 100% dividend payout policy for the company. All the available cash is distributed to the shareholders. The last dividend was twelve cents and annualized, that is forty-eight cents. That gives you approximately a 9.2% annualized yield. That does not count the recent acquisition they made of sixteen additional vessels. They are hauling cargo, gasoline and diesel, that's all they do, is crude oil and refined products. They haul them all over the world.
There is a long-term trend that is favorable for shipping. Refineries are being shut down in the U.S. due to over regulation and a grueling EPA. Countries like India are importing so that means a lot more shipping miles and a lot more shipping money. So, this is fundamental situation that's trending upwards. You are getting 9.2%. currently I have been able to figured out exactly how much this is going to increase. They have added new vessels, but they had some dilution with the stock offering. But, I would imagine the upside is at least 25% and no more than a 10% downside because many of their rates are already locked in long term contracts.
George Jarkesy: They have long-term contracts. It's in a commodity delivery business, the trend long-term is good, and the yield is more than 9%. Sounds like a great story.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours..
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