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Why Safe Bulkers, Star Bulk, and Danaos Corporation Stocks All Jumped Today

By Rich Smith - May 3, 2021 at 11:00AM

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The Baltic Dry Index charges full speed ahead, dragging all the dry bulk stocks in its wake.

What happened

Shares of dry bulk shipping stocks are on a tear this Monday morning. In 11:25 a.m. trading, Safe Bulkers (SB -0.78%) stock is up 10%, Danaos Corporation (DAC -1.36%) is up 10.1%, and Star Bulk Carriers (SBLK -0.52%) is leading the whole pack higher with an 11.8% gain.

And why? The "BDI." That's why.

Three colorful arrows racing straight up on a black background

Image source: Getty Images.

So what

Ever since 2021 began, the Baltic Exchange Dry Index (BDI), which tracks the rates that dry bulk shipping companies can charge for hauling dry bulk goods (e.g., coal, iron pellets, and grain) across the ocean, has been on a tear. From a starting point below 1,400 at the beginning of the year, the BDI has more than doubled already, passing the 3,000 mark on Thursday and closing out last week at a five-year high of 3,053.

Now what

Higher prices for dry bulk shipping almost certainly mean higher profits for dry bulk shipping stocks, and it won't take us long to prove out this thesis. In just two days' time -- on Wednesday, May 5 -- Safe Bulkers is due to report its fiscal Q1 2021 earnings results.  

Danaos will follow with its own report after close of trading on Monday, May 10.  

Then Star Bulk Carriers will round out the trio with a report of its own on May 19.  

With each successive report, and each earnings beat (investors hope), excitement about the next report should grow, and stocks prices could rise along with that hope. Indeed, hopes are already pretty high. According to earnings estimates on Yahoo! Finance, analysts believe that 2021 will see both Safe Bulkers and Star Bulk reverse their year-ago losses and earn a profit. Danaos, which was already profitable in Q1 last year, could more than double its profits this time around, earning as much as $2.90 per share.  

No wonder investors are excited.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Danaos Corporation Stock Quote
Danaos Corporation
DAC
$75.38 (-1.36%) $-1.04
Star Bulk Carriers Corp. Stock Quote
Star Bulk Carriers Corp.
SBLK
$26.68 (-0.52%) $0.14
Safe Bulkers, Inc. Stock Quote
Safe Bulkers, Inc.
SB
$3.81 (-0.78%) $0.03

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

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