Thu 24 Oct 2013 07:51

World Fuel Services: A thesis for growth


Stock market veteran highlights potential growth opportunity.



Stock market expert, Charles (Chuck) C. Carnevale, says that there exists 'a thesis for growth' for marine, aviation and land fuel specialist, World Fuel Services, in the long term.

Carnevale, creator of F.A.S.T. Graphs and a member of the securities industry since 1970, points out in a recent article that the world's population is expected to grow by 25 percent to 9 billion people by 2040. Over this period, fuel demand is forecast to increase by 90 percent and 75 percent respectively for marine and aviation.

In the article, World Fuel Services is estimated to currently have around 12 percent of the global marine market with total sales of 26 million tonnes in 2012. The company's share of the aviation market is said to be around 6 percent, whilst land fuel sales are estimated to be less than 1 percent of the global market share in this area.

"By no means does World Fuel Services have a monopoly. In turn, these current market shares could provide the company with a bit of a growth opportunity," Carnevale points out.

Currently, the marine segment provides approximately a third of the company's profits via the sale of fuel, lubricants, consulting and yacht services to clients in ports worldwide. The aviation segment contributes about two-fifths of the company's profit. A quarter comes from the land segment, supplying over 3 billion gallons of fuel product per year in Brazil, the United Kingdom and the United States.

Carnevale highlights the fact that World Fuel Services has experienced 15 years of growth. It has grown earnings at a compound rate of 16 percent since 1999, resulting in a $2.8 billion dollar market cap. However, the article also cites the recent train derailment in Quebec to point out that there exists the potential for future lawsuits, adding that "the price of fuel is volatile at best and World Fuel Services' growth has slowed as of late".

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