The global shipping industry is the backbone of a healthy economy. This has helped the delivery of goods continuously reach its intended recipients. The COVID-19 pandemic has shown us its importance and impact on the global market. These days, geopolitical tensions have also caused many ships to turn away from the Red Sea, leading to additional costs and delays.
As the world continues to strive back to “normal,” the shipping industry is still treading a steep path for recovery due to high costs and port congestions. While there may be challenges in the industry, we see some companies starting to show potential and potentially come back as soon as the sector rebounds.
Some investors might think it's too early to buy into the market, but we can also argue that “fortune favors the bold." As such, now is a great time to start looking into the sector for the next recovery leaders in the industry. If you’re unsure where to begin, we have you covered. Here are three shipping stocks that we think could double in 2024.
Global Ship Lease, Inc. (GSL)
The first on our list is a United Kingdom-based containership owner, Global Ship Lease, Inc. GSL leases its container ships under a fixed-rate time charter to its shipping company clients. The company's main segment focuses on the small and mid-sized Post-Panamax containerships for its operations. GSL owns 68 containerships, of which 36 are the wide-beam Post-Panamax type.
GSL’s latest financials reported positive results, with a 1.2% YoY increase in operating revenue and a 3.2% increase in YoY results for its first nine months of performance. While its YoY performance for the quarterly net income slightly decreased, its 9-month net income was up by 9.3%. Company adjusted EBITDA is up 9.4% YoY, and 9-month adjusted EBITDA is up 12.2%.
The company has also declared a $0.375 per class A common share and $0.546875 per depositary share for its series B preferred shares. Its strategic expansions and strategic relationship with Ascenz Marorka have helped enhance the company’s operational efficiency and cost savings, making the company one of our top shipping companies to buy.
Kirby Corporation (KEX)
The next company on our list of shipping stocks is Kirby Corporation. This company operates as a domestic tank barge operator for two marine industry segments: marine transportation, which handles the company’s towing vessels, tank barges, and maritime transportation service in the United States coasts; distribution & services for its after-market services that include its replacement parts for various engine equipment, battery equipment, and other industrial applications. In addition, KEX also allows the renting of its compressors, generators, and other equipment as part of its services.
KEX reported Q4'23 financials and ended with a strong quarter with $1.02 in EPS, up from $0.62 in the year-ago quarter. Total revenue came in at $799 million, up almost 9.5% over Q4'22. Kirby's cash flow also reported positive results, with EBITDA at $149.4 million. Despite uncertainties in the global economy, Kirby remains upbeat on its marine segments and expects improved results in 2024. Kirby expects cashflow from operations in the realm of $600 - $700 million for FY'24. This is an excellent reflection of its strong financial position and a compelling case for why KEX should be part of any shipping stock buy list.Star Bulk Carriers Corp (SBLK)
The last on our list of shipping stocks is Star Bulk Carriers Corp. Star is a shipping company based in Greece that operates a fleet of dry bulk carrier vessels that ship various products like grain, coal, iron ore, fertilizer, and steel products. It operates 124 vessels with an aggregate capacity of more than 13.8 million deadweight tonnage (dwt). The company is currently finalizing its merger with Eagle Bulk to create a global bulk dry shipping leader after the merger.
The company’s latest financials reported excellent performance despite the very challenging conditions for the sector. The company could actively manage its expenses and demonstrated a solid strategic cost control measure. In addition, the company also reported a realized net gain of $18.9 million from the sale of vessels. Despite a year-on-year decline in their numbers, the company’s strong management can continue managing costs and conducting strategic initiatives to further speed up its recovery. Its ongoing merger with Eagle Bulk is potentially a key catalyst for the company’s future. Hence, we think that its potential foothold in the industry is a worthy chance to buy this shipping company while it's cheap.
Final Thoughts: Cautious Optimism in the Shipping Sector
Shipping stocks could be a good idea for investors looking to buy into a sector that's ripe for growth. And barring any reason for consumers to stop spending, 2024 looks like it could be a banner year. As usual, and before making any investment decisions, be sure to do your due diligence and always check with an investment advisor.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
