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How Navios Maritime Holdings Could Start Floating Higher

With half of 2012 in the record books, it's important to take a look at whether the stocks that interest you can live up to their full potential. By making sure you know about a company's future plans and possible challenges, 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  ) . As we saw in our look at Navios Maritime last month, the shipping company has had a hard time dealing with the big slump in the industry resulting from oversupply of vessels and a lack of demand for shipping services. Let's take a quick look at Navios Maritime's prospects for the rest of the year and beyond.

Stats on Navios Maritime Holdings

Average Stock Price Target $5.00
2012 EPS Estimate $0.41
2013 EPS Estimate $0.45
2012 Sales Growth Estimate (14.8%)
2013 Sales Growth Estimate (3.7%)
CAPS Rating (out of 5) *****

Source: Yahoo Finance.

How will Navios do the rest of the year?
The fortunes of Navios and its shipping peers have long relied on the rates they could fetch for their vessels. With the Baltic Dry Index plumbing multi-year lows, the industry is turning into a dog-eat-dog battle for supremacy and survival.

So far, though, the strategy that Navios and Diana Shipping (NYSE: DSX  ) have used to ensure their profits would stay up as long as possible seems to be working. By signing long-term contracts, Navios and Diana have had a much slower drop in revenue than competitor Genco Shipping & Trading (NYSE: GNK  ) , which has a lot more exposure to spot-shipping rates.

Yet Navios still faces the possibility that the worst may be yet to come. Vale (NYSE: VALE  ) has a fleet of nearly three dozen iron-ore-carrying vessels coming into service this year and next, which will only add to the glut of capacity on the market.

Still, Navios has treated shareholders better than some of its peers. Even as DryShips (Nasdaq: DRYS  ) has seen its share count rise more than eightfold in the past four years, Navios's share count has only risen by 4%.

What Navios needs to succeed is for weaker players in the industry to start failing. Any resulting reduction in capacity could help set up a snowball effect that would push shares higher. With some analysts arguing that dry bulk is at a cyclical low, now may be the time for a speculative bet on the shares -- albeit one that could prove very costly if things don't turn around quickly.

Navios could well end up ruling the waves, but there are some less risky stock ideas you might prefer. Let me invite you to learn about three smart long-term stock plays in the Fool's latest special report. It's yours for the taking and is absolutely free, but don't miss out -- click here and read it today.

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.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On July 11, 2012, at 9:28 PM, psl8er wrote:

    Your analysis is incorrect. Navios has its ships in long term charters at low base rates with upsde profit sharing. They always show these as benefits to their EBITDA but as this title describes this completely ignores INTEREST and any other aspects of debt service. All of the company's ships are heavily bank indebted and ther are no profits in the charters. The company is raising new equity and therefore diluting existing investors to fund its cash flow shortfalls and pay its dividends.

    It will only get worse as its balance sheets are now full of over priced overvalued ships that cannot pay their way.

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Related Tickers

10/25/2016 4:02 PM
NM $1.18 Down -0.02 -1.67%
Navios Maritime Ho… CAPS Rating: ***
DRYS $0.39 Up +0.03 +9.00%
DryShips CAPS Rating: **
DSX $2.51 Down -0.01 -0.40%
Diana Shipping CAPS Rating: ****
GNK $5.78 Up +0.13 +2.30%
Genco Shipping and… CAPS Rating: **
VALE $6.79 Up +0.30 +4.62%
Companhia Vale CAPS Rating: ****