Eurozone Weighs on Shippers

The International Monetary Fund recently cut the global growth forecast to 3.3%, which is the slowest rate since the recession in 2009. We also saw 25,000 protesters in Greece, where German Chancellor Angela Merkel addressed further eurozone concerns. While Greece continues to face political pressure from Europe and within, it appears the country will take a firm stance on staying with euro as its currency. With so many shippers being based in Greece, does this news bode well for the troubled companies?

Greek shippers set to rise
Greece has a storied shipping tradition and is home to companies such as Dryships, Excel Maritime Carriers, Navios Maritime Holdings, and Diana Shipping. While the news out of Greece sounds somewhat promising, the big story has been global growth. The shipping industry as a whole, from dry bulk to crude, has experienced tremendous weakness lately, with daily rates near yearly lows. Investors have seen Dryships, Excel Maritime, and Diana Shipping all cut their dividends. While Navios Maritime is still paying a dividend, judging from the cash flow statement, it could be in imminent danger.

The future is still turbulent
The shipping sector is certainly still in the doldrums, and investors should take caution when considering an investment in any companies in the sector. Many of the companies are loaded down with debt and aren't able to generate the cash flows necessary to maintain operations over the long term. If you're dead-set on trying to find some value in the wreckage, Diana Shipping is a very conservative play that should outlast others. 

See more in the following video.

While these shipping companies may be too risky for most, there are great opportunities for investors if oil crosses the century mark once again. If you're on the lookout for some currently intriguing plays on global growth, check out The Motley Fool's "3 Stocks for $100 Oil." You can get free access to this special report by clicking here.

Blake Bos, Isaac Pino, and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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10/21/2016 3:59 PM
DRYS $0.36 Down -0.03 -7.23%
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NM $1.18 Down +0.00 +0.00%
Navios Maritime Ho… CAPS Rating: ***