Shipping stocks can be a volatile sector to invest in. You have the risks of the global economy as well as currency risks as well. Combine these 2 risks and as an investor, you will be in for a roller coaster ride with shipping stocks.
But as scary as that might sound to some investors, to others, they realize this just means there are right and wrong times to get into these stocks. If you can assess the company and the economy, you should be able to buy these stocks when they are on sale and sell them when they start to trade at a premium.
Let’s take a look at 3 shipping stocks that should be able to hold up well and return investors a good sum of money.
3 Shipping Stocks To Weather Any Storm
#1. Seaspan (NYSE: SSW)
Seaspan is a container shipper with a modern fleet of vessels. This is a good sign for investors as you know you won’t have to deal with lower earnings as the company pays to build newer ships.
Another positive to Seaspan is that 94% of its vessels have long term contracts tied to them. On average, these long term contracts have 5 years remaining and $5 billion in agreed contracts.
This will help keep volatility at bay for the stock and give the company time to negotiate and sign additional long term contracts.
On the earnings front, earnings per share came in at $0.21 which beat estimates by $0.03. Revenues were $213 million which was a 2% decline compared to the previous year.
Long term however, the outlook looks great for Seaspan. Of all of the shipping companies, this is the one stock that would interest me the most.
#2. Diana Shipping (NYSE: DSX)
When most people think of shipping companies, they might be thinking about oil and gas. But there are also dry shipping companies out there. And of all the dry shippers, Diana Shipping is the best of the bunch.
As a dry shipper, Diana ships steel, grains, coal and cement to name a few. They currently operate 51 vessels in their fleet and have various models of ships.
When it comes to earnings, Diana saw revenues recently increase 26% to $30.23 million. Earnings per share beat expectations with a loss of $0.34.
The loss was due mainly to slow global growth. As the world economy turns positive, Diana is set to rapidly increase revenues and earnings per share.
#3. GasLog Partners (NYSE: GLOP)
GasLog Partners was formed in 2014 when it was spun off of its parent company, GasLog. What makes this company unique is that it has a fleet of 10 carriers and the option to buy 12 more from its parent company. So you know it will get a good offer.
They also have a multi-year contract with Royal Dutch Shell, one of the largest oil companies in the world.
Since the company works on fixed rate contracts, the stock tends to be less volatile than other shipping stocks. It also is able to pay a higher and more consistent dividend, which is great news for income investors looking to diversify.
Earnings per share recently came in at $0.54 which missed estimates by $0.02 and revenues came in at $57 million. This was a 15% increase compared to the previous year.
As you can see, there are many challenges that shipping stocks face. Many companies in this industry are trying their best to limit the volatile nature of their business. These 3 stocks are doing a good job at that.
But you can never eliminate all risks. As an investor, you have to understand that these shipping stocks still carry risk and prices will be volatile. But that doesn’t mean you can’t make money by investing in them.
One of the biggest areas of concern for these stocks remains with the global economy. The sooner that picks up, the sooner revenues and profits will rise for all shipping stocks.
In the meantime, these companies are positioned well to continue to deliver earnings and take advantage when the economy does turn positive.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.