For immediate release
Chicago, IL – May 19, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: Pangea Logistics Solutions, Ltd. PANL, GasLog Partners LP GLOP and Nippon Yusen Kabushiki Kaisha NPNYY.
Here are highlights from Wednesday’s analyst blog:
Here’s what’s driving shipping stocks right now
Maritime stocks, depending on the cargo they carry, are mainly of three types: liquid carriers (tankers) which mainly transport oil and related products; container ships that mainly carry general cargo; and dry bulk carriers that transport commodities like iron ore, coal, agricultural products (mainly grain), etc.
The market has been abuzz with the strength of the oil and gas sector driving prices to record highs. Thus, most of us are already aware that the main drivers are the high thermal requirements due to weather conditions and insufficient supply of green energy; high industrial needs as economies around the world continue to recover from the pandemic; and limited supply as Russian oil is rejected by the market and the United States struggles to fill the void.
While this is understandably good news for oil and gas stocks, it’s also good news for carriers, as strong demand is driving up their rates.
With regard to the general merchandise (finished goods) segment, this is also a familiar story, linked to supply chain congestion. Container ships in particular are still lined up in ports and there still seems to be some delay in their loading/unloading operations. Container management is therefore currently sub-optimal, resulting in limited availability. As demand remains high, there is a corresponding increase in tariffs.
Container rates are so attractive, in fact, that dry bulk carriers continue to be moved into this market. This in turn reduces competition in the dry bulk market and drives up rates. The market is so attractive right now that rates continue to climb despite China’s lockdown and related reduction in dry bulk imports.
Another factor likely to lead to a normalization of rates is the addition of fleet, which should be very important in the near future. IHS Markit estimates an annual growth of the container fleet of 4.5% in 2022 and 7.5% in 2023, which will add to a growth of 4.3% in 2021. Although the current strength may easing over the rest of the year, rates are still likely to be higher historically.
The Baltic Dry Index gives us an idea of the current strength. According to the latest figures from May 17, the index is up 0.32% on the day, 46.34% on the month and 10.73% on the year.
In such a positive environment, investors would be looking to invest. So here are some stocks worth buying today:
Pangea Logistics Solutions, Ltd.
Pangea Logistics provides maritime logistics and dry bulk transportation services to industrial customers around the world. Its dry bulk cargoes include grain, coal, iron ore, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite and limestone. Its marine logistics services include cargo loading and unloading, vessel chartering, voyage planning and technical vessel management. As of March 16, 2022, the company owned and operated a fleet of 25 vessels.
Pangea Logistics belongs to the Transport – Shipping industry (top 10%). Our historical data shows that stocks belonging to the industries of the top 50%, when combined with a Buy ranking, typically drive additional short-term upside.
Zacks Rank No. 1 (Strong Buy) with value, growth and momentum scores of A, B and A, respectively, reported March quarter earnings 9.4% higher than analysts’ estimates on revenues that have been lacking by a bit. This is therefore a good reason for the appreciation of the share price.
Additionally, the Zacks consensus estimate for the current year has increased by 41 cents (32.5%) in the past 7 days. Pangea’s revenue and profit are expected to grow 5.3% and 18.4% respectively this year. This momentum should also be rewarded by investors.
It is also extremely cheap in terms of valuation, trading at just 3.18X earnings, which is well below its median level from last year and compares favorably to industry 4.31X.
GasLog Partners LP
GasLog Partners LP acquires, owns and operates liquefied natural gas (LNG) carriers under multi-year charters. As of February 24, 2022, it operated a fleet of 15 LNG carriers. The company is based in Piraeus, Greece.
GasLog belongs to the Transport – Shipping industry (top 10%).
Zacks Rank #1 (Strong Buy) with value, growth and momentum scores of A, C and C, respectively, reported March quarter earnings 17.1% higher than analysts’ estimates on 9.4% higher incomes. The Zacks ranking, along with the attractive industry to which GasLog belongs, is a strong reason for the stock price appreciation.
Analysts are also positive about the outlook for GasLog. The Zacks consensus estimate for the current year has risen 25 cents (16.1%) over the past 30 days. GasLog’s revenue and profit are expected to grow 4.8% and 29.5% respectively this year. This momentum should also be rewarded by investors.
It is also cheap in terms of valuation, trading at just 3.09X earnings, which is below its median level last year and 4.31X of the industry.
Nippon Yusen Kabushiki Kaisha
Nippon Yusen Kabushiki Kaisha has diversified operations, generally in the transportation services and logistics segments. Its global sea, land and air transportation services cater to the three shipping segments mentioned above.
Its logistics services cover a wide range of liner trading services, such as container shipping, terminal and stevedoring services for container ships, car carriers and cruise ships, and transportation services air freight.
Its bulk shipping services include transportation services of finished automobiles, heavy construction machinery and used cars. It also provides transportation services for bulk commodities such as iron ore, coal and woodchips.
In addition, it offers crude oil, petroleum products, chemicals, LNG, LPG and ammonia transportation services for petroleum, petrochemical and energy companies. Nippon Yusen is also involved in the upstream areas of the oil and natural gas supply chain.
Nippon Yusen also operates Asuka II, a luxury cruise ship; and manages commercial and residential properties. Nippon Yusen Kabushiki Kaisha is headquartered in Tokyo, Japan.
Like the others, Nippon Yusen belongs to the transportation – shipping industry and carries a Zacks rank of No. 1. The stocks have been assigned value, growth and momentum scores of A, B and F, respectively.
While details of its recent earnings are not immediately available, analysts are clearly excited about the stock’s prospects. They currently expect the company to post revenue and profit growth of 25.2% and 396.1%, respectively, in 2022.
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