Yahoo Finance Buy 4 Shipping Stocks Up More Than Double in Price in 2022
Players in the shipping industry are responsible for transporting the bulk of goods involved in global trade. Naturally, the gradual reopening of the global economies and the subsequent uptick in trading volumes have served the shipping stocks well.
As these companies are responsible for carrying bulk goods — both finished products and raw materials — including agricultural products, revenues and profitability of shippers are tied to economic growth. With growth picking up, courtesy of relaxed COVID-related restrictions, stocks in this industry should benefit at least in the near term. With demand for goods and commodities likely to remain strong and capacity limited, rates should remain high. This augurs well for shipping stocks.
Despite challenges like supply-chain woes, high operating costs and economic uncertainties, we believe that stocks such as Euronav NV EURN, Teekay Tankers TNK, International Seaways INSW and Scorpio Tankers STNG should grace one’s portfolio, given the improvement in the demand scenario from the pandemic lows.
Owing to the increased demand for goods and commodities, the Zacks Transportation - Shipping industry has gained 15.9% so far this year, despite headwinds.
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Let’s have a look at the factors that supported this impressive price performance.
The northward movement of LNG freight rates is a positive for these companies. Demand for LNG vessels is likely to get stronger owing to the Russia-Ukraine war as the European countries look for gas supplies outside Russia.
Moreover, crude tanker rates, which have been high so far this year, will likely remain steep, at least in the near term. The favorable tanker rates have increased the daily earnings potential as can be seen from the fact that versatile Suezmax and Aframax tankers are earning more than $100,000/day. This bullish scenario is likely to aid the top-line performances of stocks like Scorpio Tankers and Teekay Tankers.
The price cap imposed on Russian oil by G7 countries as they attempt to limit Russia's revenues from oil has also caused an uptick in the share price of shipping stocks like Euronav NV, which focuses on the transportation and storage of crude oil worldwide.
Improved market sentiments surrounding the Drybulk market also represents a positive. With the reopening of economic activities, many companies are reactivating their shareholder-friendly measures like dividend payouts and buybacks, underlining their financial strength and confidence in the business.
Owing to the abovementioned tailwinds surrounding the shipping industry, we believe that adding shipping stocks to one’s portfolio for generating handsome returns is a prudent move. We have zeroed in on four shipping stocks by running the Zacks Stocks Screener. Our choices have had a stellar run on the bourse this year, each gaining in excess of 100% year to date.
Image Source: Zacks Investment Research
Also, the selected stocks currently carry either a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). The stocks have been witnessing favorable earnings estimate revisions as well. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our Choices
Euronav: High oil tanker rates are supporting growth of the stock, currently carrying a Zacks Rank #2 (Buy). With oil price coming down, bottom-line growth of EURN is likely to be aided.
Driven by the positives, shares of EURN have surged 105.8% so far this year. The Zacks Consensus Estimate for full-year 2023 earnings has been revised 56.4% upward over the past 60 days. The favorable estimate revisions reflect the confidence of brokers in the stock. EURN currently has a Growth Score of B.
Teekay Tankers: TNK is being well-served by the increase in tanker rates. A gradual ramp-up in economic activities also bodes well.
Teekay Tankers currently sports a Zacks Rank #1. TNK’s shares have soared 202.3% in a year’s time. Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has moved 181.9% north.
International Seaways is a tanker company. INSW provides energy transportation services for crude oil and petroleum products. International Seaways owns and operates a fleet including ULCC, eight VLCCs, eight Aframaxes/LR2s, 12 Panamaxes/LR1s and 20 MR tankers. INSW is being well-served by the increase in tanker rates.
International Seaways currently sports a Zacks Rank #1. INSW’s shares have soared 163.4% year to date. Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has moved 10.6% north.
Scorpio Tankers is engaged in the seaborne transportation of refined petroleum products via global shipping markets. Efforts to upgrade its fleet are commendable. An uptick in voyage revenues with the rise in passengers augurs well for this shipping stock, flaunting a Zacks Rank #1, at present.
The STNG stock has soared 336.4% in a year’s time. Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has moved 45% north. STNG currently has a Growth Score of B.
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Teekay Tankers Ltd. (TNK) : Free Stock Analysis Report
Scorpio Tankers Inc. (STNG) : Free Stock Analysis Report
Euronav NV (EURN) : Free Stock Analysis Report
International Seaways Inc. (INSW) : Free Stock Analysis Report
