Please ensure Javascript is enabled for purposes of website accessibility

Why Castor Maritime Stock Just Popped

By Rich Smith - Mar 8, 2021 at 11:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Dry bulk shipping prices hit a new high. Is it time to buy?

What happened

Dry bulk shipping stock Castor Maritime (CTRM 0.52%) raced out of port Monday morning, notching a 12% gain as of 11:20 a.m. EST. There appear to be two reasons for this -- one good, and one bad.

But I fear it's the bad one that's moving Castor Maritime stock today.

Three quarters view of a dry bulk cargo ship

Image source: Getty Images.

So what

Good news first: The Baltic Exchange Dry Index (BDI), which tracks the rates shippers like Castor Maritime can get for hauling dry bulk goods (e.g. coal, iron pellets, and grain) across the ocean, continues to surge higher. Just one month ago, the BDI was at 1,315. On Friday, website clocked it at 1,829.

That's a gain of 39% in less than 30 days, and is indicative of good pricing power among dry bulk shipping stocks that should translate into gains in revenue and profits in the quarters to come.  

Now what

But here's the thing: If this were just a story about the BDI rising, then you'd expect shares of rival dry bulk shippers to be surging as well -- but it's not at all clear that this is what's happening. Diana Shipping for example, a smaller rival of Castor, is enjoying a 5% rise today, while Star Bulk Carriers, a much bigger rival with more market heft, it up just 0.5%.

Higher rates for dry bulk shippers should benefit all of these companies more or less equally, however. The fact that this isn't reflected in the stock prices today suggests that Castor Maritime stock continues to be moved more by Robinhood traders making momentum-based "Wall Street bets" on the advice of Reddit than by actual investors tracking the fundamentals of the stock.

And if that's the case, as fast as Castor Maritime went up today, it could go right back down tomorrow.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Castor Maritime Inc. Stock Quote
Castor Maritime Inc.
$1.95 (0.52%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.