In November, inflation surged to a 40-year high of 6.8%. Consumer prices have risen at their fastest clip since 1982. These inflationary pressures have forced the Fed to act, and it has promised to halt its pandemic-driven asset purchases early next year and will likely raise interest rates three times in 2022 to counter the inflation threat.

But supply chain issues persist and are expected to last longer than expected. While many companies have been harmed by supply chain issues, shipping companies are expected to benefit because they can exploit strong demand as worldwide trade surges and raise freight prices. According to a Drewry report, container shipping pre-tax profit for 2021 and 2022 could be as high as $300 billion. The industry brought in a mere $25.40 billion in 2020.

Given this backdrop, we think it could be wise to invest in quality shipping stocks A.P. Møller – Mærsk A/S (AMKBY), ZIM Integrated Shipping Services Ltd. (ZIM), and Safe Bulkers, Inc. (SB). They each possess a solid combination of growth attributes and fundamental strength.

A.P. Møller – Mærsk A/S (AMKBY)

Famous integrated transport and logistics company AMKBY is based in Copenhagen, Denmark. The company is active in container logistics and upstream oil value chains, and its operational structure includes the Maersk Line, APM Terminals, and Damco, Svitzer. Also, AMKBY handles one in every five containers shipped worldwide.

On November 2, 2021, AMKBY announced that it would buy Hamburg-based global freight-forwarder Senator International, two Boeing 777 freight aircraft, and three leased cargo planes. These moves are expected to expand the company’s business beyond ocean shipping to land- and air-based freight.

AMKBY’s revenue for its fiscal third quarter ended September 30, 2021, increased 67.5% year-over-year to $16.61 billion. The company’s net income increased 422.3% year-over-year to $5.44 billion. In addition, its cash flow from operating activities increased 58.8% sequentially to $6.57 billion.

Analysts expect AMKBY’s revenue for its fiscal year 2021 to increase 51.9% year-over-year to $60.37 billion. The stock has gained 48.7% in price year-to-date to close yesterday’s trading session at $16.52.

AMKBY’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

It has an A grade for Growth and a B grade for Value, Momentum, Stability, and Quality. It is ranked #1 within the 46-stock Shipping industry. Click here to see AMKBY’s rating for Sentiment.

ZIM Integrated Shipping Services Ltd. (ZIM)

ZIM is an Israel-based company that provides customers with innovative seaborne transportation and logistics services. The company operates a fleet and a network of shipping lines that offer cargo transportation services globally. ZIM  also provides multi-modal cargo handling, tariff management, schedule information, and other services.

On October 21, 2021, ZIM announced that it had acquired seven second-hand vessels in separate transactions. Of the seven, five were 4,250 TEU vessels, and the remaining were 1,100 TEU vessels. They are representative of the company’s broad portfolio of products.

For its fiscal third quarter, ended September 30, 2021, ZIM’s revenue increased 210.8% year-over-year to $3.14 billion. The company’s adjusted EBITDA increased 694% year-over-year to $2.08 billion, while its net income came in at $1.46 billion, up 916% year-over-year.

For its fiscal year 2021, ZIM’s EPS and revenue are expected to increase 619.7% and 161.4%, respectively, year-over-year to $36.13 and $10.43. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 96.7% in price to close yesterday’s trading session at $49.40.

ZIM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has an A grade for Value and a B grade for Growth, Momentum, and Quality. It is ranked #4 in the Shipping industry. To see the other ratings of ZIM for Stability and Sentiment, click here.

Safe Bulkers, Inc. (SB)

Headquartered in Monaco, SB engages in the acquisition, ownership, and operation of dry bulk vessels. The company provides marine dry bulk transportation services and transports bulk cargo like coal, grain, and iron ore worldwide.

On December 2, 2021, SB announced that it had agreed to acquire a Japanese dry-bulk 82,000 dwt, Kamsarmax class vessel. This vessel will meet the Energy Efficiency Design Index requirements related to the GHG emissions, ‘EEDI, Phase 3’ to comply with the NOx emissions regulation, NOx-Tier III. This acquisition will likely help SB meet its growing customer demand and increase its revenues.

SB’s net revenue for its fiscal third quarter, ended September 30, 2021, increased 78.2% year-over-year to $92.5 million. The company’s adjusted net income increased 1,348.5% year-over-year to $50.70 million, while its adjusted EBITDA increased 203.5% year-over-year to $67.70 million.

Analysts expect SB’s EPS and revenue for the quarter ending December 31, 2021, to increase 925% and 77.2%, respectively, year-over-year to $0.41 and $92.53 million. It has surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 211.2% to close yesterday’s trading session at $3.61.

It is no surprise that SB has an overall A rating, which equates to a Strong Buy in our proprietary POWR Rating system. It has an A grade for Growth and a B grade for Value, Momentum, Sentiment, and Quality. Also, click here to see SB’s rating for Stability as well.

AMKBY shares were trading at $16.88 per share on Thursday morning, up $0.36 (+2.20%). Year-to-date, AMKBY has gained 54.27%, versus a 27.48% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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