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 Star Bulk Carriers Corp. (NASDAQ:SBLK) 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 hugh vessel carrying hundreds of containers passing by a small fishermen boat.
Star Bulk Carriers Corp. (NASDAQ:SBLK)
Number of Hedge Fund Holders: 27
Star Bulk Carriers Corp. (NASDAQ:SBLK) operates as a prominent player in the global shipping industry and it specializes in the transportation of dry bulk cargoes. This includes both major commodities like iron ore, minerals, and grain, as well as minor bulks such as bauxite, fertilizers, and steel products. The company ranks 2nd among our best marine shipping stocks to invest in.
With an impressive capacity to transport over 70 million metric tons of cargo annually, the company plays an important role in connecting suppliers to markets worldwide. Its subsidiary, Star Bulk (Singapore) Pte. Ltd., supports this service by effectively bridging the gap between the origination and destination of these dry bulk commodities.
Recently, Star Bulk (NASDAQ:SBLK) made an essential move by selling the Capesize vessel m/v Star Triumph, which was the oldest in its fleet, for a gross price of $20 million. After settling associated debts, the net proceeds from this sale amount to approximately $13 million.
Following this transaction, the company’s fleet will consist of 153 owned vessels, with a total carrying capacity of 15 million deadweight tons (dwt). The fleet includes various types of vessels: Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax, and Supramax. The fleet ranges in carrying capacities from 53,489 dwt to 209,537 dwt, which allows it to adapt to different shipping needs and market demands.
In April, the company successfully completed its merger with Eagle Bulk Shipping Inc., which further strengthened its market position. The merger has allowed the company to advance its operational scale and capabilities.
As of August 1, the conversion of Eagle’s 5.00% Convertible Senior Notes into Star Bulk common stock has been completed, facilitating a smoother integration process. The company aims to achieve $50 million in cost and revenue synergies from the merger by 2025, which could significantly boost profitability and operational efficiency.
In addition to its growth strategies, Star Bulk (NASDAQ:SBLK) is focused on returning capital to its shareholders. The last declared dividend of $0.70 marks the fourteenth consecutive payment, which is a sign of the company’s focus on shareholder value. Since June 2021, it has distributed over $1.25 billion in dividends.
Overall SBLK ranks 2nd among the best marine shipping stocks to invest in. While we acknowledge the potential of SBLK 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.