Ahoy! Small Cap Dry-Bulk Shipping Stocks Soaring to Start the New Year

Photo courtesy of ship.gr

Photo courtesy of ship.gr

Shipping stocks, mostly in the dumps for the past 12 months due to what is generally considered an oversupply of ships, have enjoyed a nice ride in the early days of 2013. For the first time since November, the Baltic Dry Index, a measure of costs to ship what are called “dry-bulk commodities,” including coal, iron ore, fertilizers and a variety of grains, showed some serious signs of life. The index was up 0.3 percent in the first week of January, which is great news considering 2012 was the worst year for the index since 1986, according to a report on Yahoo! Finance from Five Star Equities (http://finance.yahoo.com/news/baltic-dry-index-posts-first-132000229.html).

The report also listed several other promising signs for the dry bulk shipping industries: Shipping rates for the largest vessels, called Capesize, which ship iron ore and coal have risen 2.2 percent. And thanks to new demand from China, iron ore shipments are expected to continue to rise. If so, this could be a boom with legs.

Thanks to this news, the Guggenheim Shipping ETF (NYSE: SEA) is enjoying a nice run. Back on November 15 SEA closed at $14.49. It closed January 9 at $19.09, up 20 cents for the day.

There are several small cap dry-bulk shippers that bear watching in the coming weeks. Here are some randomly chosen names:

Athens-based Safe Bulkers (NYSE: SB, http://www.safebulkers.com/) is a holding company with 33 subsidiaries and a fleet of 20 drybulk vessels. The fleet consists of five Panamax, three Kamsarmax, 10 post-Panamax and two Capesize vessels. SB purchased two vessels (a post-Panamax and Capesize) during 2011. The 52-week trading range for SB is $3.12-$7.73 and its market cap is $314 million. SB closed Jan. 9 at $4.10, up 6 cents for the day.

Athens-based Star Bulk Carriers (Nasdaq: SBLK, http://www.starbulk.com/en/home) owns and operates a fleet of 14 vessels including six Capesize carriers and eight Supramax carriers. Two of the carriers were purchased in 2011. SBLK’s 52-week trading range is $5.88-$18.90 and its market cap is $38 million. It closed Jan. 9 at $7.06, up 11 cents for the day.

Athens-based Paragon Shipping * (NYSE: PRGN, http://www.paragonship.com/) has a fleet of 12 vessels. PRGN’s 52-week trading range is $1.91-$10.40 and its market cap is $27 million. Its stock has been a high-flyer recently and closed Jan. 9 at $4.42, up 77 cents for the day. Just last Friday, Jan. 4, it was trading at $2.50.

Piraeus, Greece-based Navios Maritime Holdings (NYSE: NM, http://www.navios.com/) has tanker and logistics business divisions as well as a dry-bulk fleet (total number of vessels is 31 plus 26 chartered vessels it operates). NM’s 52-week trading range is $3.08-$4.49 and its market cap is $380 million. It closed Jan. 9 at $3.76, up 4 cents on the day.

* Denotes client of Allen & Caron Inc., publisher of this blog


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