When I go to the beach, I spend most of my time looking at boats on the water.
I’m amazed at the size of ships at sea … big container ships dwarf smaller pleasure craft as they pass by.
Living close to the ports of Miami and Fort Lauderdale, I’ve noticed more container ship traffic in and out of those busy operations.
It’s made me look into companies shipping goods across the Atlantic Ocean.
And I found a solid one to invest in today.
Using Chief Investment Strategist Adam O’Dell’s proprietary six-factor Green Zone Ratings system, I found a “Strong Bullish” shipping stock:
- It transports iron, coal, grain and other materials worldwide.
- It’s up 41% since late January.
- The stock recently matched its 52-week high.
Here’s why I think it will go even higher from here.
Shipping Costs Rise Again
The Baltic Dry Index is a bellwether of the broader shipping market.
It tracks the cost of current freight on various shipping routes. As you can see from the chart below, the index dropped after reaching a high in September 2021.
It’s climbing again.
The index hit above 5,000 in September 2021 — when shipping prices reached a peak.
It pared off close to 4,000 points through January of this year.
However, in February, the Baltic Dry index rose 43%. That means global shipping prices are back on the uptrend.
And I’m targeting that momentum with one shipping stock that looks fantastic right now.
Growth, Momentum AND Value in One Shipping Stock
Diana Shipping Inc. (NYSE: DSX) is a Greek global transportation company with a fleet of 34 dry bulk vessels operating around the world.
It transports cargo that is necessary for the global economy:
- Iron ore.
- Various grains like wheat, soybeans and corn.
Here’s why its strong recent performance is expected to get better from here.
COVID-19 hammered the global shipping industry.
Diana Shipping’s total revenue dropped from $220.7 million in 2019 to $169.7 million in 2020 — a 23% year-over-year decline.
As COVID-19 subsided in 2021, the global shipping industry found its sea legs (pun intended), and DSX’s total revenue reached $214.2 million last year — a 26% increase from 2020.
Estimates call for a massive jump in the company’s annual revenue. Projections suggest DSX could hit $290.1 million total revenue this year. That would be a new high for the company and 70% higher than where it was during the worst point of the pandemic.
Since late January, DSX has jumped 41% thanks to increased shipping costs and higher demand for oceanic transportation.
In the last 12 months, DSX shares are up 75%. That crushes the broader cargo transportation market’s 18% gain in the same time.
That shows the “maximum momentum” we love to see in stocks!
Diana Shipping Inc. Stock Rating
Using Adam’s six-factor Green Zone Ratings system, Diana Shipping Inc. stock scores a 94 overall.
That means we’re “Strong Bullish” on the stock and expect it to beat the broader market by at least three times in the next 12 months.
DSX rates in the green in four of our six rating factors:
- Growth — DSX has a one-year annual sales growth rate of 26.2% and a one-year annual earnings-per-share growth rate of 139%. Diana Shipping scores a 95 on growth — meaning it is in the top 5% of all stocks we analyze.
- Momentum — DSX stock has climbed 41% since late January and is up 75% over the last 12 months. This stock is the definition of “maximum momentum.” It rates a 92 on momentum.
- Value — DSX’s trading ratios are all lower or equal to the industry average, indicating better-than-average-value. Its price-to-earnings is at 7.08, while the cargo transportation average is 12. Its price-to-book is 0.99, and the industry average is 2.01. It scores an 83 on value.
- Size — With a market cap of $411.02 million, DSX is a great size to give us even more room to grow our gains. Smaller stocks tend to outperform larger stocks with similar ratings on the other five factors of Adam’s system. Diana Shipping scores a 70 on size.
The stock rates neutral in two categories…
DSX scores a 60 on volatility due to resistance on its way to a new high.
It rates a 54 on quality, but that doesn’t mean its returns or margins are sagging. Look at this:
While most of its returns are in line with the industry average, its margins are beating the pants off the rest of the cargo transportation industry.
Diana Shipping also comes with a 17.1% forward dividend yield. That equals an $0.80 payout per share per year.
Bottom line: Imports and exports drive the economy no matter the geopolitical climate or the state of inflation. And demand is rising.
Reliable cargo transportation around the world is the key to keeping all of these goods moving.
DSX is a Strong Bullish shipping stock with incredible growth, strong value and solid momentum.
That makes this global shipping stock a great addition to your portfolio.
Note: Diana Shipping Inc. has potential, but Adam’s highest-conviction stock for the shipping trend lies within the Green Zone Fortunes model portfolio.
It rates a near-perfect 99 out of 100 in Green Zone Ratings and has an X-factor that’s set to send the stock even higher as we head into the warmer months.
The X-factor in question? Tourism.
To find out how to gain access to Adam’s stock recommendation, along with his other top picks in mega trends like renewable energy and biotech, click here.
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.