We recently compiled a list of the 8 Best Marine Shipping Stocks to Invest In. In this article, we are going to take a look at where Matson, Inc. (NYSE:MATX) stands against the other marine shipping stocks.
The Maritime Freight Transport industry plays a significant role in global trade as it handles about 90% of it. The expansion of seaborne trade is benefiting consumers worldwide by providing competitive freight rates. According to Mordor Intelligence, the industry is projected to grow from approximately $381.69 billion in 2024 to around $471.81 billion by 2029, at a compound annual growth rate (CAGR) of 4.33%.
The Evolution of Shipping in a Changing World
According to a KPMG report posted in May, the global shipping industry is on an upward trend despite challenges like vessel accessibility, labor shortages, and geopolitical instability. Around 83% of the world fleet consists of small to medium-sized ships, with small vessels making up 38% by number but only 1% by tonnage. Increasing container ship availability is expected to stabilize freight rates and restore the supply-demand balance.
Port delays and logistical bottlenecks are expected to ease, but geopolitical conflicts, especially in Ukraine and the Middle East have disrupted some important shipping routes, which have led to longer, costlier voyages. The industry faces a potential shortage of maritime officers by 2026 and women make up only 2% of the workforce.
Despite these challenges, global economic growth of 3% annually will support seaborne trade expansion. Freight rates have returned to pre-pandemic levels, as tanker demand remains strong due to a 1.9% fleet growth in 2023. Additionally, LNG demand is expected to stabilize the market, while container freight rates are recovering due to voyage restrictions and reduced vessel availability.
Trends Shaping the Industry
According to the above-mentioned KPMG report, the shipping and port industries are experiencing transformative trends that are influenced by decarbonization, digitalization, and evolving supply chains. Despite 6% of post-COVID stimulus efforts targeting greenhouse gas (GHG) emission reductions, rising fuel prices due to the Russia-Ukraine conflict pose challenges, as the maritime sector accounts for 2.8% of global GHG emissions, with over 40% of marine cargo being fossil fuels.
Digital adoption is on the rise, with the smart ports market expected to grow from $1.9 billion to $5.7 billion at a CAGR of 24.3% from 2022 to 2027. The pandemic has highlighted supply chain vulnerabilities, which has prompted the companies to diversify sourcing and rethink logistics.
Our Methodology
For this article, we used stock screeners to identify 25 marine shipping stocks with a market cap of above $50 million. We narrowed our list to 8 stocks most widely held by hedge funds, as of Q2 2024. The 8 best marine shipping stocks to invest in are listed in ascending order of their hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A processional line of imposing cargo ships in a large port, capturing the scope of the company’s ocean transportation business.
Matson, Inc. (NYSE:MATX)
Number of Hedge Fund Holders: 27
One of the best marine shipping stocks to invest in, Matson, Inc. (NYSE:MATX) is a Hawaii-based company that offers its services in the ocean transportation and logistics sector. The company operates through two main segments, Ocean Transportation and Logistics.
In the Ocean Transportation segment, the company specializes in freight services tailored for domestic markets, including Hawaii, Japan, Alaska, and Guam, as well as various island economies in Micronesia. The company transports a wide range of cargo, ranging from dry goods to refrigerated items and beverages, which ensures that essential supplies reach these regions consistently. The diversity in cargo handling not only stabilizes revenue but also improves its reputation for reliability.
Meanwhile, the Logistics segment adds to the company’s offerings as it includes transportation brokerage, less-than-container load consolidation, and freight forwarding. The segment also provides warehousing, distribution, and supply chain management services, which cater to various customer needs.
The company serves a set of clients, including the U.S. military, retailers, freight forwarders, consumer goods companies, and automobile manufacturers. The extensive service portfolio positions it as a versatile provider in a competitive market.
Matson (NYSE:MATX) was part of 27 hedge funds’ portfolios in the second quarter with a total stake value of $230.763 million. Citadel Investment Group is the most prominent shareholder in the company and has a position worth $6.147 million as of Q2.
During the second quarter, the company repurchased approximately 0.6 million shares, which signals confidence in its future prospects. As of June 30, Matson’s (NYSE:MATX) cash and cash equivalents rose by $34.2 million from the end of 2023, totaling $168.2 million. The increase points to a strong liquidity position, which is essential for ongoing operations and potential investments.
Moreover, it has been actively reducing its total debt, which decreased by $19.9 million in the first half of the year, bringing the total down to $420.7 million, with most of it being long-term debt.
Analyst sentiment also supports the positive outlook for the company. On August 2, Jack Atkins raised the price target on the stock from $155.00 to $160.00 and maintained an Overweight rating.
The London Company stated the following regarding Matson, Inc. (NYSE:MATX) in its Q2 2024 investor letter:
“Matson, Inc. (NYSE:MATX) – MATX ocean freight services are benefiting from rising shipping rates and improving market conditions. Global ocean freight pricing has been driven up by the ongoing disruption in the Red Sea, coupled with ramping peak season demand and healthier trade volumes. MATX’s success since the onset of the pandemic has led to permanent volume additions in the China trade lane, a transformed balance sheet. and significant share count reduction. MATX remains strategically positioned as a US Jones Act shipping operator and its expedited freight service continues to offer an attractive value proposition for its customers.”
Overall MATX ranks 3rd among the best marine shipping stocks to invest in. While we acknowledge the potential of MATX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is promising and trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.