COVID-19 pandemic restrictions led to a shortage of shipping containers and soaring freight costs due to a demand-supply imbalance. In addition, Chinese authorities’ intervention in commodities trading continues to affect the shipping industry.
However, according to a SpendEdge report, the container shipping industry is expected to grow at a 3.53% CAGR through 2024. Moreover, the Baltic Exchange Dry Index (BDI) rose 2% to 4,651 yesterday, its highest level since November 2009. With the increasing demand for commodities, the shipping industry is expected to grow significantly in the coming months.
Against this backdrop, we think it could be wise to add shipping stocks International Seaways, Inc. (INSW), Globus Maritime Limited (GLBS), and Performance Shipping Inc. (PSHG) to one’s watchlist now. Wall Street analysts expect these stocks to rally more than 60% in price in the near term.
International Seaways, Inc. (INSW)
INSW, which is headquartered in New York City, owns and operates a fleet of 36 oceangoing vessels to transport crude oil and petroleum products. The company operates through two segments: Crude Tankers and Product Carriers. In addition, it serves independent and state-owned oil companies, oil traders, refinery operators, and international government entities.
On July 16, 2021, INSW completed a merger with Diamond S Shipping. Lois Zabrocky, INSW’s President and CEO, said, “With enhanced scale, financial strength, and commercial expertise, we have markedly strengthened our position to capitalize on favorable long-term industry fundamentals in both the crude and product markets.”
INSW’s total liabilities came in at $571.41 million for the period ended June 30, 2021, compared to $614.50 million for the period ended December 31, 2020. Its total operating expenses decreased 11.3% year-over-year to $63.72 million for the quarter ended June 30, 2021. Also, its voyage receivables were $50.98 million for the period ended June 30, 2021, versus $43.36 million for the period ended December 31, 2020.
Analysts expect INSW’s revenue and EPS to increase 90.4% and 348.5%, respectively, year-over-year to $598.49 million and $2.46 in its fiscal year 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 21.2% in price to close yesterday’s trading session at $17.43. Wall Street analysts expect the stock to hit $28 in the near term, which indicates a potential 60.6% upside.
Globus Maritime Limited (GLBS)
Integrated dry bulk shipping company GLBS provides marine transportation services worldwide. It currently owns seven vessels with a total carrying capacity of 463,765 deadweight tonnage. The company is based in Athens, Greece
On August 23, 2021, GLBS secured new charters for two vessels, M/V Sun Globe & M/V Moon. Athanasios Feidakis, President and CEO of GLBS, said, “We are happy to announce new charters for two of our vessels. These new charters are at a rate that is considerably higher than the rate of the expiring legacy charters.”
For the fiscal first quarter, ended March 31, 2021, GLBS’ net revenue increased 125.6% year-over-year to $5.17 million. Its operating income came in at $103,000 compared to a $7.4 million loss in the year-ago period. Also, its total assets were $121.95 million for the period ended March 31, 2021, versus $86.44 million for the period ended December 31, 2020. GLBS’ adjusted EBITDA was $1.31 million, compared to a $1.66 million loss in the previous period.
GLBS’ revenue is expected to be $43.6 million in its fiscal year 2022, representing a 21.8% year-over-year rise. The company’s EPS is expected to be $0.28 in the current year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 7.2% in price to close yesterday’s trading session at $3.11. Wall Street analysts expect the stock to hit $6 in the near term, which indicates a potential 92.9% upside.
Performance Shipping Inc. (PSHG)
Based in Greece, PSHG provides shipping transportation services through its ownership of tanker vessels worldwide. The company currently owns and operates five Aframax tanker vessels with a combined carrying capacity of 546,094 dwt.
Mr. Andreas Michalopoulos, PSHG’s CEO, said, “During the second quarter of 2021, we completed the special survey and ballast water treatment system installation on our M/T Briolette. We will take advantage of the weak market to complete similar work on our M/T P. Fos during the 3rd quarter, and M/T Blue Moon during the 4th quarter, following the completion of the existing time charter with Saudi Aramco.”
PSHG’s total liabilities were $149.79 million for the period ended June 30, 2021, versus $157.85 million for the period ended December 31, 2020. Also, its other assets came in at $8.06 million for the period ended June 30, 2021, compared to $7.23 million for the period ended December 31, 2020. The company’s interest and finance costs generated a $454,000 loss, down 11% year-over-year.
PSHG’s revenue is expected to come in at $35.8 million in its fiscal year 2022, representing a 101.1% year-over-year rise. The company’s EPS is expected to increase 174.7% year-over-year to $1.48 in the next year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 9.2% in price to close yesterday’s trading session at $5.01. Wall Street analysts expect the stock to hit $11 in the near term, which indicates a potential 119.6% upside.
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INSW shares were trading at $17.69 per share on Friday afternoon, up $0.26 (+1.49%). Year-to-date, INSW has gained 16.53%, versus a 19.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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