Navigate tough market conditions with these 5 outperforming shipping stocks
Investors have been assess the health of the US economy in recent weeks amid rising inflation and Fed rate hikes to calm inflation. The market has been on a wild ride.
“There are a lot of pretenses. And unfortunately, we’re not going to have a lot of in-depth examinations of the economy, whether it’s the US economy or certainly the global economy, for a while, because there’s so much that’s hard to decipher,” said Michael Skordeles, senior US macro strategist at Truist.
On the other hand, the shipping industry has benefited from increased demand with an acceleration of economic activities, supply chains becoming flexible and an increase in trade-related agreements.
Additionally, the growing trend towards automation in shipping and its increasing safety standards provide lucrative growth opportunities for industry players.
The global shipping market is expected to grow from 11.09 billion tons in 2021 to 13.19 billion tons in 2028 at a 2.5% CAGR.
Against this backdrop, we believe that 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. (CHURCH), which have so far outperformed the S&P 500, could be sound investments to navigate difficult market conditions.
These stocks have outperformed the benchmark S&P 500’s 15.7% decline year-to-date.
Star Bulk Carriers Corp. (SBLK)
SBLK is a shipping company that deals with global ocean transportation of dry bulk cargo. The company transports a range of major bulk and small bulk.
It also provides ship 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 a Green Iron Ore Corridor between Australia and East Asia through the creation of a consortium, which is expected to make the deployment of near-zero-emission shipping.
This should help the company lay the foundations for the maritime energy transition, in line with its vision of phasing out GHG emissions.
SBLK’s total revenue increased 80% year-over-year to $360.88 million in the first fiscal quarter ended March 2022. Its operating profit increased 276.3% from compared to the previous year’s value to reach $182.24 million.
The company’s net profit rose 376.4% year-over-year to $170.36 million, while its EPS was $1.67, up 363.9 % compared to the quarter of the previous year.
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 over the same period last year.
The company has also exceeded consensus EPS estimates in three of the past four quarters.
SBLK has gained 29.2% over the past year and 19.3% since the start of the year to close the last trading session at $27.05.
SBLK’s strong fundamentals are reflected in its POWR Rankings. The stock has an overall rating of B, which translates to Buy in our POWR rating system.
POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SBLK also has a B rating in Growth, Momentum and Sentiment. It is ranked No. 15 out of 46 stocks in the A rating Dispatch industry.
Beyond what is stated above, we also reviewed SBLK for stability, quality, and value. Get all SBLK ratings here.
Safe Bulkers, Inc. (SB)
SB provides dry bulk shipping services. The Company owns and operates dry bulk carriers for transporting bulk cargo, 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 82,500 dwt Kamsarmax class bulk carriers.
The company also has an exceptional backlog of 10 new ships, scheduled for delivery over the next three years. This should be strategically beneficial for the business.
In the same month, SB also announced its agreement for the acquisition of a Chinese Capesize class vessel of 176,000 dwt, built in 2012, which will be named MV Aghia Sofia and delivered in August 2022.
SB’s net revenue increased 24.3% year over year to $77.70 million in the first quarter of Fiscal 2022.
It is not GAAP compliant net revenue grew 93.4% over the prior year’s value to $32.30 million, while its non-GAAP EBITDA improved 35.5% year-over-year at $46.90 million. Its non-GAAP EPS rose 71.4% from its value a year ago at $0.24.
Analysts expect SB’s revenue for the fiscal quarter ending June 2022 to be $86.12 million, indicating a 1.4% year-over-year increase . Additionally, the company’s EPS is expected to grow 5.5% year-over-year to $0.33 over 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 has gained 18.3% since the start of the year.
It’s no surprise that SB has an overall rating of B, which equates to Buy in our POWR rating system. The stock also has a B rating in value, momentum, quality and sentiment. In the same sector, SB is ranked n°9.
In addition to the POWR ratings I just highlighted, you can see the SB ratings for Growth and Stability here.
Nippon Yusen Kabushiki Kaisha (NPNYY)
Based in Tokyo, Japan, NPNYY provides sea, land and air transportation services worldwide.
NPNYY’s trailing 12-month revenue was $18.74 billion, while its trailing 12-month net profit was $8.29 billion.
The consensus revenue estimate of $17.63 billion for the fiscal year ending March 2023 represents a 195.4% year-over-year improvement. It has an impressive history of earnings surprises, as it has exceeded Street EPS estimates in each of the past four quarters.
NPNYY has gained 58.7% over the past year to close the last trading session at $14.30. However, it has fallen by 8.1% since the start of the year.
The company has an overall rating of B, which translates to Buy in our proprietary rating 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)
Based in Haifa, Israel, ZIM provides container, door-to-door and port-to-port transportation and related services in Israel and abroad.
On March 30, ZIM announced a new charter transaction of up to six new 5,500 TEU wide beam vessels for seven years and total lease consideration of approximately $600 million, initiated by MPC Capital AG .
These new-build vessels are expected to help the company expand its expedited service network, strengthen its business prospects and improve its position in the industry.
In the same month, the company launched ZIM Ecommerce Baltimore Express (ZXB), a new fast-paced e-commerce offering that provides “A2Z” customer-centric services.
It will have various benefits including the fastest transit time, a dedicated lane outside to avoid queues, and expedited rail/air/road connections to inland destinations.
This innovation is expected to improve 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 operating income rose 228.1% from a year earlier to $2.24 billion. Profit for the period was $1.71 billion, reflecting a 190.2% year-over-year increase. Additionally, its EPS was $14.19, up 176.6% from the prior year quarter.
ZIM revenue for the current quarter is expected to be $3.86 billion, indicating 61.9% year-over-year growth. The company’s EPS is expected to rise 72.8% year-over-year to $12.8 for the same quarter.
ZIM has also beaten consensus EPS estimates for the past four quarters.
Shares of ZIM have gained 25.7% over the past year to close the last trading session at $52.75. The stock has fallen 10.4% since the start of the year.
ZIM’s POWR ratings reflect this promising outlook. The company has an overall rating of B, which translates 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. (CHURCH)
EGLE engages in the maritime transport of dry bulk cargoes all over the world. The company owns, charters and operates dry bulk carriers 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 profit improved 247.9% year-on-year to $65.38 million in the period, while its net profit rose 438.9% from its value a year ago at $53.07 million. Additionally, the company’s EPS was up 289.3% from its value a year ago at $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% year-over-year increase.
EGLE has gained 41.3% year-to-date and 53.9% over the past six months to close the latest trading session at $64.31.
EGLE’s sonic fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our POWR rating system.
The company also has a B rating in growth, momentum and quality. The title is ranked No. 19 in the same sector. To get EGLE’s ratings for Value, Stability and Sentiment, Click here.
SBLK stock closed at $26.96 on Friday, down -$0.09 (-0.33%). Year-to-date, SBLK has gained 34.04%, compared to a -17.67% rise in the benchmark S&P 500 over the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue her career in investment research. Its fundamental approach to stock analysis helps investors identify the best investment opportunities. After…