1 Shipping Company You Might Want to Buy

To say that dry bulk shippers have had a bad year would be an understatement. In fact, they've had an awful year. An oversupply of ships that is growing at a much faster rate in proportion to the prices of iron ore and steel has helped to drive prices lower to rent bulk-carrying freighters.

This has had a drastic impact on businesses across the industry. For instance, look at the chart below to see just how badly some top companies have fared in just the last month:

Company

1-Month Price Change (%)

Return on Equity*

1-Year Revenue Growth

Star Bulk Carriers (Nasdaq: SBLK  ) (18.7%) (2.4%) (8.3%)
Paragon Shipping (Nasdaq: PRGN  ) (24.9%) 0.2% (18.2%)
DryShips (Nasdaq: DRYS  ) (15.3%) 3.7% 14.9%
Eagle Bulk Shipping (Nasdaq: EGLE  ) (19.6%) (3.5%) 34.5%
Safe Bulkers (NYSE: SB  ) (6.7%) 25.2% 9.8%
Diana Shipping (NYSE: DSX  ) (1.5%) 9.0% 4.2%

 Source: S&P Capital IQ. *Latest quarter.

The one that stands alone
Fortunately, there's one company that seems to be faring well, definitely when compared to its peers, and that company is Navios Maritime (NYSE: NM  ) . It recently saw a nice uptick in its share price due to JPMorgan initiating coverage of the company with an overweight rating, rare for a company in its sector. Take a quick look at how Navios compares with the above chart:

 

1-Month Price Change (%)

Return on Equity*

1-Year Revenue Growth

Navios Maritime 5.5% 5.4% 11.3%

Source: S&P Capital IQ. *Latest quarter.

In its latest quarter, Navios reported a 7% increase in revenue to $174 million, and a 6% increase in EBITDA to $67.3 million. Additionally, the company expanded its fleet coverage for remaining available days in 2011, 2012, and 2013 to 99.7%, 68.4%, and 41.5%, respectively. This is a great move for Navios as rates are expected to continue to decrease in the future.

Furthermore, the company's logistics business continues to grow, making it much more diversified than some of its closest competitors. Year over year, the logistics business has grown top-line revenue by 24.4%, which is outstanding considering that dry bulk operations are typically declining and now the company has a way to offset lower revenue in that area.

The Foolish bottom line
At a time when most other dry bulk shippers have seen their share prices slashed, Navios has enjoyed a nice uptick. It might just be the time to check this stock out further and see if it warrants your investing dollars.

However, if the supply glut in the industry seems too uncertain or too risky for your taste, then fortunately, we've got some other great ideas for you. The Motley Fool recently published "The Fool's Top Stock for 2012," a special FREE report that you can access today. In it, we detail the rise of business in Latin America and the one company that is poised to take the most advantage of that growth. Click here to read your free report right now!

Jordan DiPietro owns no shares of any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 10, 2011, at 6:49 AM, blesto wrote:

    This is a reason it pays to diversify. I own both NM and EGLE.

    The only reason I'm holding on to EGLE at this time is because it's such a low percentage of my portfolio that I'm comfortable watching them for the time being, and they are the one with the most revenue growth. It's their debt load that's killing them.

    If I were to buy another Drybulker it would be SB.

    Anyone who has been watching this sector closely is not totally surprised by the recent events. It was almost expected. Ownership now in the survivors should reap decent rewards over the next several years.

  • Report this Comment On December 20, 2011, at 11:25 AM, kirovs wrote:

    So where is the difference between SB and NM? SB has coverage of 94%, 64% and 57% last time I checked and I believe it is actually higher now. In addition the PE for SB is only 4.17 vs 4.9 for NM.

    I know stock market short term is a popularity contest but it seems to me SB has a equal or better long term prospects.

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