5 Best Marine Shipping Stocks to Buy Now

In this article, we discuss 5 best marine shipping stocks to buy now. If you want to see our detailed analysis of the marine shipping industry, head directly to 10 Best Marine Shipping Stocks to Buy Now.

5. Global Ship Lease, Inc. (NYSE:GSL)

Number of Hedge Fund Holders: 17

Global Ship Lease, Inc. (NYSE:GSL) owns and leases containerships to shipping companies through fixed-rate charters. The company was founded in 2007 and is based in London, the United Kingdom. It is one of the best marine shipping companies to invest in. On May 10, Global Ship Lease, Inc. (NYSE:GSL) reported a Q1 non-GAAP EPS of $2.12 and a revenue of $159.29 million, beating Wall Street estimates by $0.20 and $7.54 million, respectively. 

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Global Ship Lease, Inc. (NYSE:GSL), compared to 15 funds in the prior quarter. David Salanic’s Whitefort Capital is the biggest stakeholder of the company, with approximately 2 million shares worth $37 million.

Here is what Massif Capital has to say about Global Ship Lease, Inc. (NYSE:GSL) in its Q4 2021 investor letter:

“We initiated a 6% position in GSL, bringing total maritime transit exposure up to ~9% of the portfolio when combined with our 3% SBLK position. GSL is a containership owner, leasing ships to container companies (such as Maersk) at fixed rates. As owners, they own and manage the vessels (responsible for crews, maintenance, insurance) but do not have fuel costs. GSL focuses on mid-size to smaller containerships, which serve the faster-growing inter-regional trade routes that represent ~70% of global containerized trade volume.

As they own its containers, their business is both pro-cyclical (chartered tonnages used as growth platform by liner shipping companies) and counter-cyclical (with the sale and leaseback structures used by liner companies as a balance sheet management tool). GSL has a track record that includes both organic acquisitions and a strategic combination in Q4 2018 that doubled the size of the fleet.

We like GSL because they do not have as much operational leverage as a company like ZIM (which leases on both sides of the trade), and they sign 2–5-year contracts. Liners have been eager to secure that capacity for extended durations spanning multiple years, significantly longer than has been the case historically and well-aligned with GSL’s strategic preference to lock in value over time and provide forward visibility on cash flows…” (Click here to see the full text)

4. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)

Number of Hedge Fund Holders: 17

ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) engages in door-to-door and port-to-port container shipping in Israel and internationally. It is one of the best marine shipping stocks to watch. On June 21, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) announced that it has strengthened its collaboration with the cross-border trade financing platform, 40Seas. This partnership aims to enhance the integration of 40Seas’ adaptable digital financing solution through ZIM’s website.

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), compared to 14 funds in the prior quarter. Dmitry Balyasny’s Balyasny Asset Management is a prominent stakeholder of the company, with 425,564 shares worth $10 million. 

Here is what Evermore Global Advisors has to say about ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) in its Q2 2021 investor letter:

“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.

There were several notable developments during the second quarter. Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 full year EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”

3. Matson, Inc. (NYSE:MATX)

Number of Hedge Fund Holders: 17

Matson, Inc. (NYSE:MATX) is a Hawaiian provider of ocean transportation and logistics services. The company’s Ocean Transportation segment transports refrigerated commodities, building materials, automobiles, household goods, livestock, general sustenance cargo, and other retail merchandise. On June 22, Matson, Inc. (NYSE:MATX) declared a $0.32 per share quarterly dividend, a 3.2% increase from its prior dividend of $0.31. The dividend is distributable on September 7, to shareholders of record as of August 3. It is one of the best marine shipping stocks to buy. 

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Matson, Inc. (NYSE:MATX), compared to 24 funds in the prior quarter. Ryan Tolkin’s Schonfeld Strategic Advisors is a prominent stakeholder of the company, with 408,827 shares worth $7.73 million.  

Here is what Meridian Funds specifically said about Matson, Inc. (NYSE:MATX) in its Q2 2022 investor letter:

“Matson, Inc. (NYSE:MATX) is a US-based ocean and logistics company with a leading position in Pacific shipping that provides a vital lifeline to Hawaii, Alaska, and Guam as well as premium and expedited service from China to the US. Given its unique position and terminal assets, Matson has an unparalleled speed advantage over other ocean transportation companies. This speed advantage has been highly valuable to customers given supply chain disruptions which has helped improve inventory velocity. Although the company recently reported strong quarterly earnings growth, its stock declined on signs of slower shipping demand due to rising inventories within the consumer channel and improving port congestion. Given these dynamics, overall container rates have begun to recede from the robust levels experienced in 2021 but still remain at levels that are nearly 4x that of pre-pandemic levels. Although we expect container rates to continue to normalize, we believe the company’s unique speed advantage and increased service capacity between Asia and the U.S. could help offset some of these headwinds. Matson continues to generate strong free cash flow and has proven to be a strong allocator of capital, including increasing dividend payouts for shareholders and buying back stock. During the period, we trimmed our position in the company.”

2. Star Bulk Carriers Corp. (NASDAQ:SBLK)

Number of Hedge Fund Holders: 18

Star Bulk Carriers Corp. (NASDAQ:SBLK) is a shipping company that transports bulk commodities, including iron ores, minerals and grains, bauxite, fertilizers, and steel products worldwide. It is one of the best shipping stocks to invest in. On May 16, Star Bulk Carriers Corp. (NASDAQ:SBLK) reported a Q1 GAAP EPS of $0.44, beating market estimates by $0.14. However, the revenue of $156.54 million fell short of Wall Street consensus by $7.04 million. 

According to Insider Monkey’s first quarter database, 18 hedge funds were bullish on Star Bulk Carriers Corp. (NASDAQ:SBLK), compared to 16 funds in the earlier quarter. Howard Marks’ Oaktree Capital Management is the biggest stakeholder of the company, with 26 million shares worth $550.5 million. 

Here is what Massif Capital has to say about Star Bulk Carriers Corp. (NASDAQ:SBLK) in its Q3 2021 investor letter:

“We initiated one long position, one short position and exited one position during the third quarter. Our new long position was in Star Bulk Carriers (SBLK), a pure-play dry bulk operator with roughly 120 controlled vessels and 14 million tons of combined cargo capacity globally.

SBLK has one of the better management teams in the maritime shipping industry and the lowest cost structure among all dry bulk names. After announcing their new dividend policy in May, SBLK now has one of the best payout structures in shipping. The firm has paid out $0.3 and $0.7 per share in dividends for the first and second quarters of 2021. SBLK will most likely announce a dividend for the third quarter somewhere in the $1.15-$1.25 per
share range, depending on movement in net working capital.

We believe the best way to look at this business is through cash generation potential and how much is returned to investors. The current equity valuation does not reflect current rates for shipping (earnings), partly because of the velocity of the move in rates and because shipping cycles turn, and it’s not clear whether this is a local top or the early innings of a multi-year cycle. Our belief is the latter. Part of our catalyst is the market re-rating the stock higher once the length of the increased earnings power becomes understood. It is a relatively strong catalyst in the sense that with a strong dividend policy, we can be patient for the market to underwrite this story as the cash is either returned to us via a high dividend yield if the market is either slow or chooses not to join our side of the trade.

Our estimates suggest a time-charter equivalent rate (net profit or loss of operating a vessel daily) of at least $30,000 for SBLK in Q4, with the firm earning a potential annual average of $26,000. Our base case is that this is a strong floor going into next year, with little need to articulate much more upside. If rates hold, which we expect them to do, we could see a 20+% annual dividend next year for SBLK. If the market priced the equity such that the dividend yield was 8%, that implies a $62 stock. Today our base case target for the firm is $37 per share. This is likely conservative as we know that third-quarter rates are higher than the second quarter, and third-quarter dividends will most likely reflect that. We are cautious about diving too deep into the sensitivities to the upside with this position as we are arriving at some pretty remunerative torque using current contracted values and seemingly conservative forecasts…” (Click here to see the full text)

1. Kirby Corporation (NYSE:KEX)

Number of Hedge Fund Holders: 20

Kirby Corporation (NYSE:KEX) was founded in 1921 and is headquartered in Houston, Texas. The company is an operator of domestic tank barges. Its Marine Transportation segment offers marine transportation and its vessel transport bulk liquid product, including petrochemicals, black oils, refined petroleum products, and agricultural chemicals. Kirby Corporation (NYSE:KEX) is one of the best marine shipping stocks to invest in. 

On April 27, Kirby Corporation (NYSE:KEX) reported a Q1 non-GAAP EPS of $0.68 and a revenue of $750.44 million, outperforming Wall Street estimates by $0.04 and $26.77 million, respectively. 

According to Insider Monkey’s first quarter database, 20 hedge funds were bullish on Kirby Corporation (NYSE:KEX), compared to 22 funds in the prior quarter. Ric Dillon’s Diamond Hill Capital is a prominent stakeholder of the company, with 1.08 million shares worth $75.8 million. 

Here is what Diamond Hill Small Cap Fund has to say about Kirby Corporation (NYSE:KEX) in its Q3 2021 investor letter:

“Bottom contributors in Q3 included Kirby Corporation. Kirby, a U.S.-based tank barge transporter of bulk liquid products, retreated from its Q2 highs. The recovery in hydrocarbon product volumes slowed due in part to delta-variant related disruptions and an active hurricane season in the Gulf Coast, which restricted refinery operations.”

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