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Why Safe Bulkers Stock Just Popped 12.5%

By Rich Smith – Sep 13, 2021 at 12:27PM

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Dry bulk rates take a turn for the better.

What happened

Ask and ye shall receive, shipping investors.

Dry bulk shipper Safe Bulkers (SB 2.94%) is up 12.5% as of 11:30 a.m. EDT Monday.

Last week, I commented that a remarkable rise in the share price of dry bulk shipping company Diana Shipping (DSX -1.70%) looked ill-advised in light of the recent steep drop in shipping prices for dry bulk cargo including coal, grain, iron ore, and similar ocean-going freight. It would be ill-advised, that is, unless "dry bulk shipping prices ... resume rising soon."

And wouldn't you know it? They just did.

Shares of Diana Shipping are moving 7% higher today.

Simple green arrow going up.

Image source: Getty Images.

So what

According to the latest data from Bloomberg, the Baltic Exchange Dry Index shot up 6.8% late last week and, while it hasn't quite reached its recent high water mark of 4,235 hit late last month, it is moving back in the right direction once again.  

Now what

And the well-timed turnaround in dry bulk rates isn't the only thing helping out Safe Bulkers stock today. In addition to the index deciding to suddenly cooperate with investors, this morning, analysts at investment bank H.C. Wainwright dropped a note in support of Safe Bulkers stock. Initiating coverage of the shares with a buy rating and a $6.50 per share price target, Wainwright threw its support behind Safe Bulkers stock today, reports

"Despite dry bulk equities being up more than 100% in the past year and spot rates being at their highest level in over a decade," TheFly says Wainwright is "constructive on the outlook for the dry bulk market" because "limited fleet growth" means that even "moderating demand" for dry bulk cargo won't be enough to torpedo profit margins.

Wainwright therefore foresees "further tightening of the supply/demand balance and ... strong vessel earnings over the next year." That's good news for Safe Bulkers stock -- and probably for Diana Shipping as well.

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.

Stocks Mentioned

Safe Bulkers, Inc. Stock Quote
Safe Bulkers, Inc.
$2.80 (2.94%) $0.08
Diana Shipping Stock Quote
Diana Shipping
$3.48 (-1.70%) $0.06

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

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