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Investment Opportunities

Best Shipping Stocks to Ride the Shipping Wave

Shipping delays persist throughout the supply chain with many anecdotes of packages arriving considerably late, however, shipping stocks have been doing considerably well lately. The Acadiana Advocate reported on a consumer paying $20 for next-day shipping yet not receiving her package for a week. This is just one of the countless cases of packages taking far longer than usual to be delivered.

These delays are problematic for consumers and manufacturers alike. But where there is a problem, there is an opportunity. For instance, shipping stocks have done quite well, with some seeing 1-year returns of several hundred percent.

No one knows exactly when supply chain disruptions will clear up, but experts believe it will take a while. 2022 could still see significant shipping delays. In order to take advantage of the boom in shipping investment, here are our shipping stocks to buy:

  • Danaos Corp. (NYSE: DAC)
  • Euroseas Ltd. (Nasdaq: ESEA)
  • EuroDry Ltd. (Nasdaq: EDRY)
  • Safe Bulkers, Inc. (NYSE: SB)
  • Star Bulk Carriers Corp. (Nasdaq: SBLK)

shipping stocks to invest in.

Best Shipping Stocks to Add to Your Portfolio

Here, we’ll outline why the shipping stocks we picked are some of the best ones to consider adding to your portfolio.

Danaos

Based in Greece and named after a Greek mythological figure said to have built the first ship, Danaos owns large-size containerships. The company owns large-size containerships. It charters its containerships on long-term fixed-rate contracts with large liner companies. Some of its ships are as large as 5 X 13,100 twenty-foot equivalent units (TEU).

Danaos stock (DAC) has done quite well since the pandemic. Its market cap is around $1.5 billion with a P/E ratio of just 1.65 and an earnings per share (EPS) of 45. It also has a dividend yield of about 2.92%. The stock is likely to grow modestly over the next 12 months; however, over the past year, it has gone from around $14.50 per share to nearly $75. Its net income is up than 500% year-over-year (YOY) and its profit margin is quite high at 110%.

Euroseas

Euroseas is a shipping company based in Athens, Greece. It currently has a fleet of 16 container carriers on the water with two under construction. The deadweight tonnage (DWT) of its largest container is over 72,000 and it will be adding two more vessels with over 37,000 DWT each. Most of its carrier containers are feeder types, and both of the under-construction carriers are feeders.

Euroseas stock (ESEA) is a shipping stock to buy because it is up more than 400% over the past year. It has a market cap of $190 million and a P/E ratio of 8.85. Its EPS is 2.97. This stock is considered undervalued and thus, some analysts expect it to grow 50% or more over the next year. Euroseas has increased its net income by more than 8,700% YOY. Its profit margin for Q3 2021 was 36.7% compared to just 4.78% in Q4 2020.

Shipping Stocks to Buy: EuroDry

As you may have guessed, EuroDry is a shipping company that operates dry bulk carriers. Its carriers ship iron ore, coal, grains and other minor bulks. The company is based in Athens and was founded in 2018. It currently operates a fleet of 9 dry bulk vessels with DWT as high as 82,000.

EuroDry stock (EDRY) has a market cap of $62 million. Its P/E ratio is 3.96 and its EPS is 5.56. The stock is over nearly 400% over the past year and some analysts expect it to increase more than 100% over the next 12 months. Fidelity says the stock is undervalued and has a growth stability rating of 98 out of 100. Plus, its net income is up more than 2,000% YOY and it has posted a 62% profit margin for Q3 2021.

Best Shipping Stocks No. 2 Safe Bulkers

Safe Bulkers is based in Greece and through its subsidiaries, it provides marine dry bulk transportation services. It operates dozens of vessels with a DWT of up to 181,000. It transports coal, grain and iron ore for some of the largest consumers of those resources. 

Safe Bulkers stock (SB) has a market cap of over $500 million. Its P/E ratio is 4.30 and its EPS is 0.96. SB is priced modestly at around $4, but its price was about $1 a year ago. The stock is still considered highly undervalued at that price and analysts are setting 12-month price targets around 50% higher than its current price. The company has been able to increase its net income by more than 1,500% over the past year and it posted a profit margin of nearly 60% for Q3 2021.

Best Shipping Stocks No. 1 Star Bulk Carriers

Last on this list of the best shipping stocks is Star Bulk Carriers, a dry bulk shipping company that is also based in Athens, Greece. Star Bulk operates a fleet of 128 carriers ranging from 52,000 DWT to 210,000 DWT. The company provides dry bulk shipping of major bulks including iron ore, minerals and grain and minor bulks which include bauxite, fertilizers and steel products.

Star Bulk stock (SBLK) is another undervalued stock, despite an increase in its share price from around $8 one year ago to nearly $24 today. The company has a market cap of almost $2.5 billion. It has a P/E ratio of 5.84 and an EPS of 4.07. The company also pays a very generous dividend of 22%. It increased its year-over-year income by nearly 850% in Q3 2021 while posting a 53% profit margin. Look for SBLK to continue its positive trend as companies scramble to catch up on delayed shipments.


About

Bob Haegele is a personal finance writer who specializes in investing and planning for retirement. His hefty student loan burden inspired him to pay off his loans, and now he’s helping others get their finances in order. When he’s not writing, he enjoys travel and live music.

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