Navios Maritime Hit Rough Waters in 2011

As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Navios Maritime Holdings (NYSE: NM  ) . The Greek shipping company found itself near the epicenter of two harsh realities in 2011: Greece's sovereign debt troubles and a terrible pricing environment for shipping. Despite a nice dividend yield, investors bid the stock down substantially this year. Below, I'll take a closer look at the events that moved shares of Navios Maritime Holdings this year.

Stats on Navios Maritime Holdings

2011 YTD Return (29.4%)
Market Cap $358 million
1-Year Revenue Growth 11.3%
1-Year Earnings Growth (21.6%)
Dividend Yield 6.8%
Cash / Debt $195 million / $1.48 billion
CAPS Rating (out of 5) ****

Sources: S&P Capital IQ and Motley Fool CAPS.

Why did Navios sink this year?
As badly as shares of Navios performed this year, they actually represent fairly good results compared with the rest of the industry. Eagle Bulk Shipping and Excel Maritime (NYSE: EXM  ) both dropped 75% or more this year, while DryShips (Nasdaq: DRYS  ) lost more than 60%. Even Diana Shipping's (NYSE: DSX  ) stock only managed to limit its losses to about 36% for the year.

The declines stem from continuing weakness in the Baltic Dry Index, the benchmark by which bulk shippers measure demand for their vessels. Although the BDI was flat this year, it's still down 85% since mid-2008. That hasn't stopped operators like Genco Shipping & Trading (NYSE: GNK  ) , which doesn't have as much protection from locked-in long-term contracts as some of its peers, from operating profitably -- but it does present a big challenge.

To deal with the bad conditions, Navios is taking steps to stand out from the wreckage of its industry. The company got a favorable rating from one Wall Street analyst after it posted revenue and EBITDA gains in its most recent quarter. More important, Navios has branched out into logistics, which makes the company more diversified than competitors that focus solely on dry bulk shipping.

Eventually, though, the entire industry will have to deal with the underlying issue of overcapacity. Whether a big upswing in the global economy or contraction in the shipping industry proves to be the factor that gets supply and demand back toward equilibrium remains to be seen, but until the situation resolves itself, Navios could continue to see choppy waters for the foreseeable future.

Still, if you'd rather avoid the shipping industry entirely, let us point you in another direction. You can discover the name of an amazing stock idea in our brand-new free report: "The Motley Fool's Top Stock for 2012." But don't wait -- click here and grab your copy today before it's gone.

Click here to add Navios Maritime Holdings to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. 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 Fool has a disclosure policy.


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  • Report this Comment On January 08, 2012, at 10:59 AM, zukerman wrote:

    Dan, I've been watching this sector for some time now. I'm thinking this would be a great time to stick a toe in the water. NM would be the obvious choice here, however GNK is my favorite. After reading your bio, I think you might be able to shed some light on a question thousands want answered. You are most likely familiar with Sirius XM. You would also be familiar with the fact Malone owns 40%, and is likely to do an RMT. Many an investor is scared to death he will steal this company out from underneath them. Your specialty is making the complex something less likely to give me a headache. If you want attention, this is sure to please many people. Five minutes research will give you an idea how much this topic is on the minds of investors. Any help would be appreciated.

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