Market strategist Louis Navellier said he believes that shipping equities offer investors alpha.
Q2 2021 hedge fund letters, conferences and more
“Port bottlenecks and supply chain disruptions have conspired to produce increasing dry bulk and container shipping rates that are multiples of a year ago that are now, and will continue to hit the bottom lines of shipping companies.”
Compelling Opportunities In Shipping Equities
Mr. Navellier believes the following equities and ETF offer investors compelling opportunities:
The Breakwave Dry Bulk Shipping ETF (NYMARKET:BDRY) gives investors the opportunity to profit from the increase in dry bulk shipping rates. BDRY has been capitalizing on rising shipping costs with a portfolio of near-dated freight futures contracts on dry bulk indices. BDRY has been on fire, with a year-to-date total return in excess of 250%.
Danaos Corporation (NYSE:DAC) provides pure play access to growth in container shipping rates. Free cashflow at Danaos for the first six months of 2021 is up 3x YoY. Danaos shows a significant adjustment to earnings for the latest period, but these adjustments provide a more conservative earnings picture and still remain alluring.
Star Bulk (NASDAQ:SBLK) provides pure play access to growth in dry bulk shipping rates. Among the many dry bulk shippers, Star Bulk, with 128 vessels, is one of the largest, best capitalized, most profitable with a high, albeit lumpy dividend payout.
Textainer Group Holdings Limited, with a fleet of 4.1 million containers, gives investors the opportunity to capitalize on the shortage of containers. With bottlenecks keeping containers on dry land for longer supply has outstripped demand and Textainer has $1.1 billion in new containers that have been delivered or on order. Textainer is part finance company and part container company and accordingly, provides earning upside through astute financial management too.
