The rising volume of e-commerce means that shipping companies are experiencing more and more parcel deliveries. Some of these companies have transitioned from mail delivery to focus on parcels. A major threat is the growth of Amazon’s own delivery system, but for now, there is still growth to be realized.
Another important component for shipping companies is global trade. Globalization and increasing connectivity will drive the growth of these companies. There were some sell-offs last year due to the US – China trade war, but this situation looks to be resolving. There are also some concerns over the European market and their slow-down. In the long-term, they make great investments, as globalization will surely continue, and shipping companies are instrumental in facilitating trade. One important thing to watch out for, is that these companies follow the economy and will go up and down with the health of the market.
United Parcel Services (UPS-N)
A world leader in parcel delivery and supply chain management solutions. Analysts expect that they will continue to grow and will transition from brick and mortar to online. They have large economies of scale and will survive, even with competition from Amazon.
He has viewed this a good indicator of the economy – especially consumer goods. Amazon has decided UPS could not meet peak delivery demand and has decided to invest in their own distribution network. They will still survive.
A multinational courier delivery company. They are well positioned to benefit from increasing global trade and e-commerce. They experienced some sell-off due to the trade war and concern for Amazon, but they are still expected to grow due to trade volumes rising. A proxy for economic growth, and a good long term holding.
(A Top Pick Aug 09/19, Down 10%) They had an earnings call where they missed guidance and dropped their expectations. Asia-Pac economic slowing was to blame. However, there is only a handful of global shipping companies and this is on sale right now -- a rare opportunity.
A dry bulk shipping company. They are a diversified owner and operator of ocean going cargo vessels. They have 31 vessels. They were the first dry bulk company to go public in the US.
A play on commodities and global expansion but has some overhanging issues from a company specific basis. A lot of debt and assets are made up wholly of the ships they own. Would recommend something that is a little more direct.
Diana Shipping Inc. (DSX-N)
All companies in the shipping sector carry a huge debt load, but analysts thinks this has a high upside along with high risk. They have one of the best balance sheets out of all their competitors. They announced that they were buying back 3.1%, of its outstanding common stock recently.
Have to be ready for tremendous volatility. He generally keeps a basket of them and at year-end sells and buys new ones. Bulk Dry Index (?) has been ticking up slowly after a horrendous Q4, which he feels indicates more optimism in China.
Eagle Bulk Shipping Inc (EGLE-Q)
A holding company, that practices transportation of a broad range of dry bulk cargoes worldwide. They have been getting more and more investor attention, with buy recommendations. They beat expectations last quarter and are expected to announce a further increase in revenues on their next earning report.
Yesterday was a very big day for shippers. Shippers are going to move first before commodities move. Very volatile so you have to have the stomach to own them. Expect there will be a slow move upwards. This one gained 51% yesterday. Good dividends.
Safe Bulkers Inc. (SB-N)
They are expecting a better second quarter and they recently experienced a jump in share prices. The stock price was going down before as they are a volatile name, but it is looking more positive recently.
You don't want to allow more than 5% of shipping stocks in your portfolio. Large dividends are tempting but these stocks are very volatile.
Star Bulk Carriers Corp. (SBLK-Q)
It’s been beaten down a lot due to trade concerns, but it is at a good level to buy into. It is one of the leading shipping companies that cannot be kept down for too long as trading recovers.
This is the way to play commodities – through volume and not price. He loves industries that are coming out of bankruptcies. He does not think commodity producers are going to compete on price. (Analysts’ target: $7.60).
Seaspan Corp. (SSW-N)
A containerships chartering company that practices long-term fixed-rate charters. Hedge funds are taking bullish position in SSW. They pay a dividend 5.75%.
Trading 27 X current and forward earnings. Dividend yield is 6.75%. Expectation for dividend growth is still there. Outlook looks very strong. Valuation is a little rich, but it is an appealing stock.
Golar LNG Ltd (GLNG-Q)
A liquefied natural gas shipping company based in Bermuda. They have good access to the US LNG market and it’s considered a long-term play on robust gas demand.
Liquefied natural gas is going to be huge down the road. It got put on the back burner with the fall in oil prices. There are a lot of LNG plants that have been built and are being built in the US, that are ready to take the very cheap natural gas. Thinks this will…
Nordic American Tankers (NAT-N)
They own, lease, and charter double hull Suezmax oil tankers. Their share prices are linked to how oil does, so this will go up and down with the sector.
Shipping company that owns and charters Suez tankers for oil transportation. Chart indicates that this is trying to build a little bit of a base. It has done this before, so it may be a false signal. Chart shows a big drop from 2010 all the way down to late 2012. If you own, $8…
Ship Finance International (SFL-N)
They just experienced decent share price growth over the last couple months. The valuation is still reasonable but growth is limited. Analysts recommend to watch closely the stock so you can buy on weakness. They are another company that is volatile that follows the general market.
Owns, operates and charters out large crude carriers, oil tankers, product shipment and dry bulk. Freight rates are very low and a lot of companies are having difficulty generating cash flow. About 10.8% dividend. Has some pretty heavy debt maturities coming up in 2 years.
Teekay Shipping Corp. (TK-N)
Their core business is international crude oil and gas marine transportation. They recently sold off their remaining interests in teekay offshore to brookfield for $100 million to refocus on their core business.
Oil tanker business is absolutely phenominal. Prices they are getting for shipping oil is unbelievable.