The stock of international shipping company Castor Maritime (CTRM 1.06%) has been soaring this week. As the market heads into the final hours of trading for the week, shares of Castor Maritime are more than 37% higher than last Friday's closing price, according to data provided by S&P Global Market Intelligence.
Before investors get too excited about the stock's big move this week, they should realize that even after the monster gain, Castor Maritime shares are still down 50% over the last 12 months.
But shares have been on the upswing since they bottomed in late January. That's when a severe downtrend in the Baltic Dry Index (BDI) reversed a three-month-long decline. Castor Maritime sets its charter rates based on the BDI.
The BDI spiked to a multiyear high in early October 2021 before declining by 75% over the subsequent several months. But after a sharp rebound, the index began another month-long drop from mid-March through last week. The reversal of that decline seems to be what triggered Castor Maritime shares to soar this week.
Castor's fleet consists of 29 vessels including 20 dry bulk carriers. With the rates the company is able to charge back on the upswing, it's not surprising to see Castor Maritime's stock moving higher as well. This week's gain, as sharp as it has been, is really just a reversal of an equally steep decline. Commodity prices are rising as geopolitical concerns and supply chain constraints abound right now. Investors who noted the outsize gain in Castor Maritime shares shouldn't lose sight of the equally outsize declines the stock had over the past year.