Sky-high inflation and the Fed’s hawkish stance to curb it have resulted in significant market volatility this year. Amid the declining global consumer demand, recession fears, and falling freight rates, the shipping industry is facing issues of having too many containers.
However, the domestic shipping industry is anticipated to be boosted by the $703 billion investment made by the U.S. Department of Transportation for advancing port facilities across 22 states and one territory through the Maritime Administration’s Port Infrastructure Development Program.
Moreover, the SonicShares Global Shipping ETF (BOAT) has gained 10.9% over the past three months, substantiating investors’ interest in shipping stocks. On top of it, the freight and logistics market is expected to grow at a 4% CAGR to reach $21.13 billion by 2030.
Given this backdrop, it could be wise to add fundamentally strong shipping stocks GasLog Partners LP (GLOP) and Overseas Shipholding Group, Inc. (OSG), trading under $10, to your portfolio.
GasLog Partners LP (GLOP)
Headquartered in Piraeus, Greece, GLOP acquires, owns, and operates liquefied natural gas (LNG) carriers under multi-year charters. As of February 24, 2022, the company operated a fleet of 15 LNG carriers.
On November 30, GLOP announced a dividend of $0.546875 per share on its 8.75% Series A cumulative redeemable perpetual preference shares, payable on January 3, 2023, for all shareholders. This reflects its shareholder return ability.
In terms of its forward P/E, GLOP is trading at 2.95x, 62.4% lower than the industry average of 7.85x. The stock’s forward price/sales multiple of 0.95 is 25.7% lower than the industry average of 1.28.
GLOP’s revenues increased 18.8% year-over-year to $95.68 million for the third quarter that ended September 30, 2022. Its adjusted profit came in at $39.81 million, representing a growth of 61.2% year-over-year. Moreover, its adjusted EPU came in at $0.63, representing an increase of 85.3% year-over-year.
For the fourth quarter ending December 2022, analysts expect its revenue and EPS to come $98.30 million and $0.79, representing a growth of 11.5% and 76.6% year-over-year, respectively. It surpassed consensus EPS and revenue estimates in three of the four trailing quarters, which is impressive.
GLOP has gained 13.4% over the past six months and 18.6% over the past three months to close the last trading session at $6.52.
GLOP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GLOP has an A grade for Momentum and Quality and a B for Growth and Sentiment. In the 46-stock A-rated Shipping industry, it is ranked #2.
Click here to see the additional POWR Ratings for GLOP (Value and Stability).
Overseas Shipholding Group, Inc. (OSG)
OSG is the owner and operator of a fleet of oceangoing vessels engaged in transporting crude oil and petroleum products in the U.S. flag trade. The company serves independent oil traders, refinery operators, and government entities.
On December 8, OSG announced that it had exercised options to extend its six bareboat charter agreements with American Shipping Company ASA for an additional three-year term commencing in December 2023.
“We believe the market continues to support attractive commercial opportunities for these vessel leases to supplement the strong and stable cash flow generation from our niche businesses,” said Sam Norton, OSG’s President, and CEO.
On November 15, OSG announced that it had agreed to purchase five million shares of its common stock from Cyrus Capital at a price of $2.86 per share. This share repurchase might bolster its shareholder returns.
OSG’s shipping revenues increased 30.9% year-over-year for the third quarter that ended September 30, 2022, to $123.06 million. Its net income came in at $13.25 million, compared to a net loss of $16.01 million in the year-ago period. Moreover, its EPS came in at $0.15, compared to a loss per share of $0.18 in the prior-year period.
The stock has gained 33.2% over the past six months and marginally over the past month to close the last trading session at $2.89.
OSG’s POWR Ratings reflect its promising outlook. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Momentum and Quality and a B for Growth and Value. Within the same industry, it is ranked first.
Click here to see OSG’s rating for Stability and Sentiment.
GLOP shares were trading at $6.52 per share on Thursday afternoon, down $0.00 (0.00%). Year-to-date, GLOP has gained 54.21%, versus a -17.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
2 Shipping Stocks to Buy for Under $10 StockNews.com
