Due to continued global port congestion and rising demand for marine shipping services to ease the supply constraints, freight shipping costs have surged significantly of late. Moreover, with the lifting of lockdowns in China, the rising demand for shipping services to transport dry bulk commodities should benefit shipping companies.
Investor optimism in this space is evident in the SonicShares Global Shipping ETF’s (BOAT) 1.9% gains over the past week. The global ocean freight forwarding market is expected to grow at a 7.4% CAGR to reach $192.14 billion by 2026.
Therefore, prominent shipping stocks Grindrod Shipping Holdings Ltd. (GRIN) and Overseas Shipholding Group, Inc. (OSG) could be ideal additions to one’s portfolio this month. These stocks are rated ‘Strong Buy’ in our proprietary POWR Ratings system.
Grindrod Shipping Holdings Ltd. (GRIN)
Based in Singapore, GRIN is an international shipping company that owns, charters-in, and operates a fleet of dry bulk carriers and tankers worldwide. The company serves shipping companies, trading houses, mining companies, industrial manufacturing companies, and oil companies, as well as traders of grains, steel, and forestry products.
It operates a fleet of 32 vessels consisting of 24 owned dry bulk carriers and seven long-term chartered-in dry bulk carriers.
For its fiscal 2022 first quarter ended March 31, 2022, GRIN’s revenue increased 61.2% year-over-year to $110.29 million. The company’s gross profit came in at $40.70 million, representing a 223.1% rise from the prior-year period.
GRIN’s pre-tax income came in at $29.16 million, up 825.5% from the year-ago period. While its adjusted net income increased 1119.3% year-over-year to $29.83 million, its adjusted EPS increased 1281.8% to $1.52. As of March 31, 2022, the company had $103.63 million in cash and cash equivalents.
The consensus EPS estimate of $6.63 for its fiscal 2022 ending December 31, 2022, represents a 12.6% year-over-year improvement. It surpassed the consensus EPS estimates in the three trailing quarters.
Analysts expect the company’s revenue to reach $508.40 million for the same fiscal year, indicating an 11.5% rise from the prior-year period. Over the past six months, the stock has gained 32.8% and closed yesterday’s trading session at $19.42.
The stock’s 1.07x forward EV/Sales is 29.6% lower than the 1.52x industry average. In terms of forward Price/Sales, GRIN is currently trading at 0.72x, which is 38.9% lower than the 1.19x industry average.
GRIN’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Sentiment and a B grade for Growth, Value, and Momentum. Click here to see the additional ratings for GRIN’s Stability and Quality.
GRIN is ranked #4 of 44 stocks in the A-rated Shipping industry.
Overseas Shipholding Group, Inc. (OSG)
OSG owns and operates a fleet of oceangoing vessels engaged in the transportation of crude oil and petroleum products in the United States flag trade. It serves independent oil traders, refinery operators, and the United States and international government entities.
As of December 31, 2021, it operated a fleet of 24 vessels totaling an aggregate of approximately 1.7 million deadweight tons.
OSG’s total shipping revenues for its fiscal 2022 first quarter ended March 31, 2022, increased 28% year-over-year to $104 million. The company’s operating income came in at $7.70 million, compared to a loss of $15.79 million in the prior-year period.
As of March 31, 2022, the company had $76.84 million in cash and cash equivalents. Over the past year, the stock has gained 15.1% to close yesterday’s trading session at $2.13.
The stock’s 1.88x trailing-12-month EV/Sales is 21% lower than the 2.38x industry average. In terms of trailing-12-month Price/Sales, OSG is currently trading at 0.51x, 70% lower than the 1.69x industry average.
OSG’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Growth, Value, and Quality. Click here to see the additional ratings for OSG’s Sentiment and Stability.
OSG is ranked #2 in the Shipping industry.
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GRIN shares were trading at $18.80 per share on Wednesday afternoon, down $0.62 (-3.19%). Year-to-date, GRIN has gained 9.44%, versus a -20.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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