Top Shipping Stocks for Q3 2021

The shipping industry includes companies that transport cargo around the world, from grains to apparel to electronics to appliances. In spite of the term “shipping,” these companies often transport commodities and merchandise by air, sea, and on land by truck or train. They also provide storage and other logistics. Some of the largest shipping companies in the world include A.P. Møller-Mærsk A/S (AMKBY) and Hapag-Lloyd AG (HPGLY).

In the past year, the shipping industry has underperformed the broader market. The benchmark Dow Jones U.S. Marine Transportation Index has provided a 1-year trailing total return of 21.5% compared with 44.4% for the iShares Russell 1000 ETF (IWB). These market performance numbers and all statistics in the tables below are as of June 14, 2021.

Here are the top 3 shipping stocks with the best value, the fastest growth, and the most momentum, respectively.

These are the shipping stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

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• Danaos Corp.: Danaos is a Greece-based company that owns a fleet of large-size container ships. It charters is ships on long-term contracts at fixed rates to global liner companies.
• Navios Maritime Partners LP.: Navios Maritime Partners is a Greece-based company offering maritime freight transportation. It owns and operates a fleet of dry bulk and container vessels.
• ZIM Integrated Shipping Services Ltd.: ZIM Integrated Shipping Services is an Israel-based provider of seaborne transportation and logistics services. The company operates a fleet of vessels and offers multi-modal, cargo handling, tariff management, and other related services. ZIM announced in late April that, in partnership with Israel-based Sodyo Ltd., it has established ZIMARK, a new technology-based company that will provide scanning solutions for the logistics and supply chain sectors. ZIM also announced that it would make a direct equity investment in Sodyo.

These are the top shipping stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

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• Matson Inc.: Matson is a transportation and logistics company offering services throughout North America. The company owns a fleet of container shipping vessels, provides domestic and international rail intermodal service, long haul and regional highway service, as well as supply chain and third-party logistics. Matson announced in late April financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended March 31, 2021. Net income rose 2,194.7% on revenue growth of 38.5%. Costs and expenses rose at a much slower pace than revenue compared to the year-ago quarter, helping to boost net income. The company noted that it was seeing significant supply chain congestion, which it said is likely to persist through the second quarter.
• A.P. Møller-Mærsk A/S: A.P. Møller-Mærsk is a Denmark-based integrated transport and logistics company. It offers container vessels, supply ships, special vessels, tug boat activities, reefer container box manufacturing, and other related services.
• Castor Maritime Inc.: Castor Maritime is a Cyprus-based global shipping company offering seaborne transportation of a wide range of commodities. It owns and operates a fleet of bulk carrier vessels. The company recently announced financial results for Q1 FY 2021, which ended March 31, 2021. It reported net income of $1.1 million, a significant turnaround from the net loss of $0.3 million in the year-ago quarter. Because the company went from negative earnings to positive earnings in the most recent quarter we cannot calculate an EPS growth rate for the table above. Revenue rose 155.9%.

These are the shipping stocks that had the highest total return over the last 12 months.

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• Danaos Corp.: See above for company description.
• Global Ship Lease Inc.: Global Ship Lease is a U.K.-based container shipping company. The company owns a fleet of mid-size and smaller containerships, which it leases to container shipping companies through fixed-rate time charters. It also offers technical and commercial management services. Global Ship Lease recently announced that it has agreed to purchase 12 containerships from Borealis Finance LLC for a total purchase price of $233.9 million. The purchase increases the company’s total fleet to 62 containerships. The ships are scheduled to be delivered during the third quarter of 2021.
• Navios Maritime Partners LP.: See above for company description.

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