Navigating Rough Market Conditions with These 5 Outperforming Shipping Stocks
Investors have been assessing the health of the U.S. economy in recent weeks amid the rising inflation and the Fed’s rate hikes to cool inflation. The market has been on a wild ride.
“There’s a lot of headfakes going on. And unfortunately, we’re not going to get a lot of clean looks at the economy, whether the U.S. economy or certainly the global economy, for quite some time because there’s just so many things that are hard to decipher,” said Michael Skordeles, senior U.S. macro strategist at Truist.
On the other hand, the shipping industry has been enjoying increased demand with economic activities pacing up, supply chains becoming flexible, and a surge in trade-related agreements.
Additionally, the growing trend of automation in marine transportation and its escalating safety norms offer lucrative growth opportunities to the industry players.
The global cargo shipping market is projected to grow from 11.09 billion tons in 2021 to 13.19 billion tons in 2028 at a CAGR of 2.5%.
Given this backdrop, we think shipping stocks Star Bulk Carriers Corp. (SBLK), Safe Bulkers, Inc. (SB), Nippon Yusen Kabushiki Kaisha (NPNYY), ZIM Integrated Shipping Services Ltd. (ZIM), and Eagle Bulk Shipping Inc. (EGLE), which have been outperforming the S&P 500 so far, could be smart investments to navigate the rough market conditions.
These stocks have outperformed the benchmark S&P 500 index’s 15.7% decline year-to-date.
Star Bulk Carriers Corp. (SBLK)
SBLK is a shipping company that engages in the worldwide ocean transportation of dry bulk cargoes. The company transports a range of major bulks and minor bulks.
It also provides vessel management services and is based in Marousi, Greece.
On April 6, 2022, SBLK announced the signing of a joint letter of intent with its partners BHP Group Ltd. (BHP), Rio Tinto Plc (RIO), and Oldendorff Carriers GmbH & Co. to develop an iron ore Green Corridor between Australia and East Asia through the establishment of a consortium, that is expected make the deployment of near-zero-emission shipping more feasible and favorable.
This should help the company create the foundation for maritime energy transition, aligning with its vision to phase out GHG emissions.
SBLK’s total revenues increased 80% year-over-year to $360.88 million in the fiscal first quarter ended March 2022. Its operating income grew 276.3% from the year-ago value to $182.24 million.
The company’s net income increased 376.4% year-over-year to $170.36 million, while its EPS came in at $1.67, up 363.9% from the prior-year quarter.
The consensus EPS estimate of $1.97 for the current quarter represents a 56.7% year-over-year improvement. The consensus revenue estimate of $334.91 million for the same quarter represents a 29.6% increase from the same period last year.
The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
SBLK has gained 29.2% over the past year and 19.3% year-to-date to close the last trading session at $27.05.
SBLK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, translating to Buy in our POWR Ratings system.
The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SBLK also has a B grade in Growth, Momentum, and Sentiment. It is ranked #15 of 46 stocks in the A-rated Shipping industry.
Beyond what is stated above, we’ve also rated SBLK for Stability, Quality, and Value. Get all the SBLK ratings here.
Safe Bulkers, Inc. (SB)
SB provides marine dry bulk transportation services. The company owns and operates dry bulk vessels for transporting bulk cargoes, primarily coal, grain, and iron ore.
On May 31, 2022, SB announced that it had entered into an agreement for the acquisition of two Chinese dry-bulk, 82,500 dwt, Kamsarmax class vessels.
The company also has an outstanding order book of 10 new build vessels scheduled to be delivered over the next three years. This should be strategically beneficial for the company.
In the same month, SB also announced its agreement to acquire a 2012-built, Chinese, dry-bulk, 176,000 dwt, Capesize class vessel, to be named MV Aghia Sofia, and delivered within August 2022.
SB’s net revenues increased 24.3% year-over-year to $77.70 million in the fiscal first quarter of 2022.
Its non-GAAP net income grew 93.4% from the year-ago value to $32.30 million, while its non-GAAP EBITDA improved 35.5% year-over-year to $46.90 million. Its non-GAAP EPS increased 71.4% from its year-ago value to $0.24.
Analysts expect SB’s revenue for the fiscal quarter ending June 2022 to come in at $86.12 million, indicating an increase of 1.4% year-over-year. Also, the company’s EPS is expected to grow 5.5% year-over-year to $0.33 in the same period.
Over the past six months, the stock has gained 15.3% to close yesterday’s trading session at $4.46. The stock gained 18.3% year-to-date.
It is no surprise that SB has an overall B rating, equating to Buy in our POWR Ratings system. The stock also has a B grade in Value, Momentum, Quality, and Sentiment. In the same industry, SB is ranked #9.
In addition to the POWR Rating grades I’ve just highlighted, you can see the SB’s ratings for Growth and Stability here.
Nippon Yusen Kabushiki Kaisha (NPNYY)
Headquartered in Tokyo, Japan, NPNYY provides marine, land, and air transportation services worldwide.
NPNYY’s trailing-12-month revenue stood at $18.74 billion, while its trailing-12-month net income came in at $8.29 billion.
The consensus revenue estimate of $17.63 billion for the fiscal year ending March 2023 represents a 195.4% improvement year-over-year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
NPNYY has gained 58.7% over the past year to close the last trading session at $14.30. However, it has declined 8.1% year-to-date.
The company has an overall rating of B, translating to Buy in our proprietary ratings system. NPNYY is also rated B in Growth, Value, Momentum, and Stability.
Within the Shipping industry, it is ranked #6. Click here to see additional POWR Ratings for Quality and Sentiment for NPNYY.
ZIM Integrated Shipping Services Ltd. (ZIM)
Headquartered in Haifa, Israel, ZIM provides container shipping, door-to-door and port-to-port transportation services, and related services in Israel and internationally.
On March 30, ZIM announced a new charter transaction of up to six 5,500 TEU wide beam newbuild vessels for seven years and a total charter hire consideration of approximately up to $600 million, initiated by MPC Capital AG.
These new build vessels should help the company expand its expedited services network, strengthen commercial prospects, and enhance its position in the industry.
In the same month, the company launched ZIM Ecommerce Baltimore Express (ZXB), a new and speedy e-commerce offering that provides “A2Z” customer-centric services.
It will have various benefits, including the fastest transit time, a dedicated out-of-gate lane to avoid queues, and expedited rail/air/road connections to inland destinations.
This innovation is expected to enhance the company’s revenue stream.
For the fiscal first quarter ended March 2022, ZIM’s gross profit increased 214.5% year-over-year to $2.31 billion.
Its results from operating activities grew 228.1% from the year-ago value to $2.24 billion. Profit for the period stood at $1.71 billion, reflecting a 190.2% increase year-over-year. Moreover, its EPS was $14.19, up 176.6% from the prior-year quarter.
ZIM’s revenue for the current quarter is expected to come in at $3.86 billion, indicating a 61.9% year-over-year growth. The company’s EPS is expected to increase 72.8% year-over-year to $12.8 for the same quarter.
ZIM also beat the consensus EPS estimates in the trailing four quarters.
ZIM’s shares have gained 25.7% over the past year to close the last trading session at $52.75. The stock has declined 10.4% year-to-date.
ZIM’s POWR Ratings reflect this promising outlook. The company has an overall B rating, translating to Buy in our proprietary rating system.
ZIM is rated A in Quality and Value and a B in Momentum. It is ranked #7 in the same industry. To see additional POWR Ratings for Growth, Stability, and Sentiment for ZIM, click here.
Eagle Bulk Shipping Inc. (EGLE)
EGLE engages in the ocean transportation of dry bulk cargoes worldwide. The company owns, charters, and operates dry bulk vessels that transport a range of bulk cargoes and other products.
EGLE’s revenue increased 90.9% year-over-year to $184.40 million in the fiscal quarter ended March 2022.
Its operating income improved 247.9% year-over-year to $65.38 million over the period, while its net income increased 438.9% from its year-ago value to $53.07 million. Also, the company’s EPS increased 289.3% from its year-ago value to $3.27.
Street expects EGLE’s EPS for the current quarter to improve 90.3% year-over-year to $5. The consensus revenue estimate of $155.08 million for the same period represents a 47.2% increase year-over-year.
EGLE has gained 41.3% year-to-date and 53.9% over the past six months to close the last trading session at $64.31.
EGLE’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company also has a B grade in Growth, Momentum, and Quality. The stock is ranked #19 in the same industry. To get EGLE’s ratings for Value, Stability, and Sentiment, click here.
SBLK shares closed at $26.96 on Friday, down $-0.09 (-0.33%). Year-to-date, SBLK has gained 34.04%, versus a -17.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More…