Now that the demand for raw materials is picking up, shipping is also picking up again. About two days ago, according to a Maritime logistics professional report, the Baltic Dry Index (BDI) rose to its highest peak in the past 11 years. The index rose 55 points to 4,147, and according to the report, this index has risen in the past nine consecutive trading sessions.
This Index is reported daily by Baltic Exchange in London. The FDI is a measure of the price of shipping important commodities by sea, including iron ore, coal and grains.
Using the TipRanks stock screener, let’s take a look at some of the best dry bulk supplies in the industry.
The author is neutral on all stocks mentioned in this article.
Star Bulk Carriers is a global shipping company focused on the transportation of dry bulk cargoes, including iron ore, minerals and grain. Earlier this month, the company reported Q2 results with travel revenue of $311.4 million, compared to $146.1 million in the same quarter last year.
Adjusted earnings came in at $1.26 per share, compared to an adjusted net loss of $0.19 per share for the same period last year.
SBLK also declared a quarterly cash dividend of $0.70 per share, payable September 8 to all shareholders with a record as of August 23, 2021. In addition, the company also approved a share repurchase program of up to $50 million.
Petro Pappas, CEO of Star Bulk stated: “The record low order book, combined with the lack of space at the yard and the uncertainty about the future propulsion of ships coupled with covid-related inefficiencies, create a very favorable supply-side picture for our industry.”
Pappas added that the increase in government spending in the form of pandemic stimulus programs had led to strong demand for commodities on a global basis “with solid volumes of iron ore, coal, grains and small bulk commodities” and expects the trend to continue. (See Star Bulk Stock Chart: on TipRanks)
About two months ago, Jeffries analyst Randy Giveans was convinced of a recovery in dry bulk shipping after a series of meetings with the management of SBLK. He said he expected the recovery to come on the back of an improving global economy and rising demand for dry bulk.
The analyst repeated a buy and raised the stock’s price target from $25 to $28 (up 28.4%).
On TipRanks, SBLK has received 4 positive analyst reviews for a unanimous Strong Buy consensus rating. Furthermore, the stock scores a 9 out of 10 on the TipRanks smart score system, which is based on 8 unique data sets, indicating that the stock is likely to outperform the market.
Meanwhile, the Star Bulk Carriers average price target of $30.67 implies upside potential of about 40.6% from current levels.
Genco Shipping & Trading Ltd. (GNK)
Genco Shipping is headquartered in the United States and is a dry bulk shipping company focused on the worldwide transportation of goods.
In the second quarter, the company’s revenues grew 63% year-over-year to $121 million, primarily due to higher rates on its bulk carriers, both large and small, and its chartered third-party vessels. Genco reported diluted earnings of $0.75 per share versus a diluted loss of $0.43 per share in the year-ago quarter.
The company also increased its quarterly cash dividend at $0.05 per share for the prior quarter to $0.10 per share for the second quarter, payable August 25 to all shareholders with a record as of August 17.
Genco has also agreed to purchase three modern, fuel-efficient Ultramax vessels, bringing the total to six Ultramax vessels. (See Genco stock chart on TipRanks)
Interesting, while the TipRanks Risk Factors tool indicates that GNK has a higher financial and business risk factor of 91%, compared to the industry average risk factor of 38.8%, the company’s Q2 results seem to suggest otherwise.
That could be because Genco has revamped its corporate strategy to focus on a low debt-to-equity ratio, increase the company’s asset base and “pay quarterly cash dividends to shareholders based on cash flows after the redemption of the debt minus a reserve.”
When it comes to reducing its debt, the company paid off $82.2 million in debt in the first half of the year, or about 18% of its outstanding debt.
Following the Q2 results, top-rated analyst on TipRanks from Noble Financial, Poe Fratt, reiterated a buy and a price target of $28 (up 48.8%) for the stock. Fratt mentioned the positive outlook for the dry bulk shipping market, adding that “the receipt of a variable dividend policy has improved, and the fleet renewal program, the upside Cape option and higher public float are positive.”
In the meantime, hedge fund activity increased by 40,800 shares in the last quarter.
As for the rest of the street, the consensus is that Genco is a strong buy, based on 3 buys and 1 hold. The average price target of Genco Shipping of $27 implies upside potential of about 43.5% from current levels.
Headquartered in Stamford, Connecticut, Eagle Bulk Shipping is solely focused on the medium dry bulk carrier segment and owns a large fleet of Supramax or Ultramax vessels. These ships have deadweight tonnage (DWT) ranging from 50 thousand tons to 65 thousand tons.
In the second quarter, Eagle’s net time and travel charter revenues increased 126.3% year-over-year to $129.9 million due to rising charter rates “driven by the market recovery with increased demand for dry bulk products,” the company said. company press release.
Diluted earnings per share were $0.74 per share in the second quarter, compared to a diluted loss of $1.99 per share in the same period last year.
Eagle’s CEO Gary Vogel stated: “We delivered our best ever operating performance with adjusted EBITDA of over $62 million as the Baltic Supramax Index rose nearly 60% during the quarter, reaching a level that has been seen in more than ten years. was not seen for years.” (See Eagle stock chart on TipRanks)
Following the Q2 results, Noble Financial analyst Poe Fratt reiterated a buy recommendation and a price target of $65 (up 37.2%) for the stock. The analyst noted, “GLE’s track record of fleet renewal program is solid. Following the closing of pending transactions, the fleet will expand to its all-time high and is well positioned to benefit from the continued strong fundamentals of the dry bulk market.”
When it comes to Blogger sentiment the stock is bullish at 100%, well above the industry average of 71%.
As for the rest of the street, the consensus is that Eagle is a mediocre buy, based on 2 bargains. The average price target for Eagle Bulk Shipping of $66 implies upside potential of about 39.3% from current levels.
Danaus Corp. (Dacian)
Danaos is an independent owner of modern, large container ships. It currently has a fleet of 65 container ships with a total Twenty-Foot Equivalent (TEU) capacity of 403,793 TEUs.
In the second quarter, the company reported revenue of $146.4 million, compared to $116.8 million in the same period last year. Adjusted earnings per share rose 62.1% year-over-year to $3.34 per share.
Following Q2 results, Clarksons Platou . analyst Omar Nokta raised the price target from $85 to $100 with a 16.9% increase and repeated a buy on the stock. Nokta commented: “Danaos reported strong second quarter results as expected, with plenty of even stronger quarterly results to come in the coming years. The company has secured several new longer-term charters that increase revenue visibility and improve revenue quality.”
As for the rest of the street, the consensus is that Danaos is a mediocre buy, based on 2 bargains. The average price target of Danaos Corp of $95 implies upside potential of about 11% from current levels.
Disclosure: At the time of publication, Shrilekha Pethe did not hold any position in any of the securities mentioned in this article
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