Despite challenges, the shipping industry is flourishing with the rise in e-commerce, overseas trade, and infrastructure spending. Therefore, investors could consider investing in shipping stocks Grindrod Shipping Holdings Ltd. (GRIN), International Seaways, Inc. (INSW), and Navigator Holdings Ltd. (NVGS) this month.
The global cargo shipping market is set for growth due to increased demand driven by global economic expansion and investments in port infrastructure. Container transportation, particularly in Asia-Pacific, plays a pivotal role in this anticipated market upswing. The global cargo shipping market is projected to expand at a CAGR of 7% to reach $4.20 trillion by 2031.
Moreover, for the fourth quarter of 2023, the Baltic and International Maritime Council (BIMCO) projects crude tanker cargo volume growth of 0.5% to 1.5% with a 4.5% to 5.5% increase in tonne miles. Product tanker cargo volume is expected to accelerate between 3% to 4% this year.
Furthermore, the global shipping container market is witnessing significant growth driven by expanded maritime trade resulting from increased international trade agreements. The global shipping container market is expected to grow at a CAGR of 12% by 2028.
Considering these conducive trends, let’s examine the fundamentals of three Shipping stock picks, beginning with the third choice.
Stock #3: Grindrod Shipping Holdings Ltd. (GRIN)
Based in Singapore, GRIN owns and operates a global fleet of dry bulk carriers, transporting diverse commodities for international clients, including shipping companies, trading houses, and industrial manufacturers. Its fleet includes 15 handysize and 16 supramax/ultramax vessels.
On October 24, 2023, GRIN completed the purchase of the supramax bulk carrier IVS Hayakita and the en-bloc sale of ultramax bulk carriers IVS Bosch Hoek and IVS Hayakita for $46.50 million.
The company also entered contracts to sell handysize bulk carriers IVS Merlion and IVS Raffles for $11.60 million each, with uncertainties regarding timely delivery. It repaid around $10 million in debt from its senior secured credit facility.
GRIN’s trailing-12-month levered FCF margin of 17.85% is 197% higher than the industry average of 6.01%. Its 3.67 trailing-12-month cash per share is 74.4% higher than the 2.10 industry average.
GRIN pays $1.37 annually, which translates to a yield of 15.22% on the prevailing price level. Its four-year average dividend yield is 17.73%.
In the three months ended September 30, 2023, GRIN’s revenue grew 4.9% year-over-year to $112.46 million. The company reported gross profit and adjusted EBITDA of $4.19 million and $11.20 million, respectively. As of September 30, 2023, its total liabilities amounted to $192.03 million, compared to its total liabilities of $261.78 million as of December 31, 2022.
GRIN’s revenue is expected to grow 10.5% year-over-year to $164.35 million for the fiscal year ending December 2024. Its EPS for the current year is expected to improve 51% from the prior year. The company surpassed the revenue estimates in three of the trailing four quarters, which is impressive.
GRIN’s shares increased 9.6% over the past six months to close the last trading session at $9. It gained marginally intraday.
GRIN’s POWR Ratings reflect its positive prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GRIN has a B grade for Value and Momentum. Within the B-rated Shipping industry, it is ranked #15 of 42 stocks.
In addition to the POWR Ratings stated above, one can access GRIN’s additional Growth, Stability, Sentiment, and Quality ratings here.
Stock #2: International Seaways, Inc. (INSW)
INSW owns and operates oceangoing vessels for the global transport of crude oil and petroleum products, serving diverse clients, including oil companies, traders, and government entities. The company operates in two segments: Crude Tankers and Product Carriers.
INSW’s trailing-12-month gross profit margin of 73.55% is 55.4% higher than the industry average of 47.32%. Its 58.69% trailing-12-month EBIT margin is 170.1% higher than the 21.73% industry average.
INSW declared a regular quarterly dividend of $0.12 per common share. The company pays $0.48 annually, which translates to a yield of 0.99% on the prevailing price level. Its four-year average dividend yield is 5.59%. The company has raised its dividend payouts at a CAGR of 26% over the past three years.
During the third quarter, which ended September 30, 2023, INSW generated total shipping revenues of $241.71 million, up 2.1% from the prior-year quarter. The company's net income and adjusted EBITDA stood at $97.94 million and $150.95 million, respectively.
As of September 30, 2023, its total liabilities amounted to $910.95 million, compared to its total liabilities of $1.13 billion as of December 31, 2022.
Analysts expect INSW’s revenue and EPS to rise 22.6% and 36.1% year-over-year to $1.05 billion and $10.40, respectively, for the fiscal year ended December 2023. The company surpassed the revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 61.3% over the past year to close the last trading session at $48.41.
INSW’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Momentum, Sentiment, and Quality. Within the same industry, it is ranked #12.
To see INSW’s additional POWR Ratings for Growth, Value, and Stability, click here.
Stock #1: Navigator Holdings Ltd. (NVGS)
Based in London, the United Kingdom, NVGS operates a worldwide fleet of 56 liquefied gas carriers, providing transportation services for petrochemical gases, liquefied petroleum gases, and ammonia to energy companies and industrial users. The company also offers shipshore infrastructure and consultancy services.
On October 25, 2023, NVGS and Yara Growth Ventures jointly invested €5.40 million ($5.91 million) in Azane Fuel Solutions to develop the world's first ammonia bunkering network, targeting the maritime industry's transition to zero-carbon fuels. The initiative aims to address emissions from the global deep-sea shipping fleet, which currently represents approximately 3% of total ocean shipping emissions.
NVGS’ trailing-12-month gross profit margin of 52.57% is 11.1% higher than the industry average of 47.32%. Its 41.20% trailing-12-month EBITDA margin is 18.5% higher than the 34.76% industry average.
NVGS declared a cash dividend of $0.05 per common share. The company pays $0.20 annually, which translates to a yield of 1.28% on the prevailing price level. Its four-year average dividend yield is 0.04%.
In the third quarter ended September 30, 2023, NVGS’ total operating revenue and net income increased 29% and 647.9%, respectively, from the previous-year quarter to $137.77 million and $21.38 million. Moreover, its EPS and adjusted EBITDA amounted to $0.26 and $72.25 million, respectively, up 766.7% and 74.2% year-over-year.
Street expects NVGS’ revenue and EPS to grow 18.8% and 151.6% year-over-year to $118.10 million and $0.33 for the fourth quarter ended December 2023. The company surpassed the revenue estimates in three of the trailing four quarters.
NVGS’ shares have gained 36.4% over the past year to close the last trading session at $15.66.
NVGS’ POWR Ratings reflect an optimistic outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Growth and Sentiment and a B for Momentum and Stability. Within the same industry, it is ranked #8.
Click here for NVGS’ additional Value and Quality ratings.
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INSW shares were trading at $48.68 per share on Tuesday afternoon, up $0.27 (+0.56%). Year-to-date, INSW has gained 7.04%, versus a -0.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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