A notable lagging group in the stock market’s recovery has been marine shippers. While the rest of the transport sector shows the wheels of commerce once again turning, the shares of shippers have been stuck at port, victims of excess capacity and uncertainty about global shipping demand. The Baltic Dry Index, a measure of international shipping prices for dry bulk cargoes, has recovered from its 2008 low, but still remains 78% shy of its high in the summer of 2008. Although this price weakness reveals that marine transporters are still in a difficult position, investors seem to be awakening to a hope that the demand part of the equation is improving for the shippers. After months under water, some of these shipping stocks are floating again.
The Claymore/Delta Global Shipping Index (SEA-N) exchange traded fund tracks the performance of marine shippers, both dry bulk, container ships, and tankers. Although lacking the trading volume and price momentum that fuelled a rally in the second quarter, the ETF is Stock Trends Bullish. Of particular interest, though, is the dry bulk shipping stocks. The share prices of carriers of crude oil and liquefied natural gas have been comparatively buoyed – the stock of Teekay Corp (TK-N), for example, is up 37% in the last three months and is hitting new 52-week highs. A resurgence of the depressed dry bulk shippers (transporters of raw materials like iron ore, coal, and grain) and container ships (generally carrying consumer and industrial finished goods) - is a signal that the global economic recovery is real, and not an illusion of economic wishful thinking. Judging by a nascent recovery of some of these stocks, investors are gradually betting that reality will be catching up with our prayers.
Although it is too early to declare a solid shift in trend for the group, the appearance of certain dry bulk and container shippers in the Stock Trends filters for Weak Bearish stocks, as well as strong recent price moves suggests that investors should keep an eye on the progress of their developing trends. Among stocks currently alerting of trend changes are Seaspan Corp. (SSW-N), TBS International Ltd. (TBSI-Q), Paragon Shipping Inc. (PRGN-Q), and DryShips, Inc. (DRYS-Q). Recent price moves by Diana Shipping Inc. (DSX-N), Danos Corp (DAC-N), and diversified shipper Frontline Ltd. (FRO-N) reflect a sign of hope, too. International Shipholding Corp. (ISH-N), Overseas Shipbuilding Group (OSG-N), Navios Maritime Holdings Inc. (NM-N), and Safe Bulkers, Inc. (SB-N) have been trending bullish since mid-summer – all adding to the encouraging signal coming from the shippers.
Most of these names may be unfamiliar to the average investor. However, they represent an important bellwether of the vitality of the global economy. Although the precariously fragile U.S. economy factors heavily in a clean bill of health, the global economy and international trade to emerging markets will be a key indicator of demand factors that will continue to drive the materials and industrial sectors. The same factors that drive up the price of raw materials will eventually make its way to filling the shipping capacity that has dragged on maritime haulers since the 2008 global collapse. When the Baltic Dry Index and the stocks of dry bulk shippers start to trend bullish investors can begin to rest more comfortably.
2 comments:
Great Post! Just wanted to say that people should be watching the Bakken oil area of Saskatchewan right now. Small and mid cap companeis have been taken out by large cap plays like Crescent Point Energy(CPG) and others this year. RYD, ATK, CEY, NVS, REL and other small-mid cap oil Bakken plays could be the next potential take out targets. Forget Oilsands, hello Bakkens!
.Did you know that the shares of apple computer traded below 5 dollars a share in 1998 surprise suprise suprise yes they traded at only 4.50 cents a share in 1998 now apple computers shares trade at over 500 dollars a share hows that for a stock rallly. Now you might say oh well thats just a fluke Right. Wrong. Did you know that the shares of Laboratory Corporation of America also traded below five dollars in 1998. The stock traded at just 3.00 dollars a share in 1998 today the shares of Laboratory Corporation of America are trading at 90.00 a share. Did you know that Petsmart shares traded at just 2.00 dollars a share in the year 2000. Today their trading at 58.00 a share. The shares of Tractor Supply Traded at Are you ready 1.30 in october of 2000 Yes thats one dollar and thirty cents a share in october of 2000. Today the the shares of tractor supply are trading at you better be sitting down 87 dollars a share.
These stocks are just a few good examples theirs dozens of other stocks that once traded under five dollars a share that have seen enormous increases in the price of their shares but theiirs not enough time or space to list them all here. Now who still believes that all stocks trading below five dollars are bad investments.
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