Here in the midst of earnings season, the most interesting aspect of the current tape action is the bounce-back pattern we’re seeing in big-name stocks — despite disappointing Q1 numbers.
Several blue-chip companies have missed estimates, some by a country mile. However, the initial damage is being absorbed in a matter of a couple of days, only to see those same names bid back up to the levels seen prior to printing bad news.
The way I see it, there are two sides to this coin.
The positive takeaway is that clearly, global capital wants to own U.S. assets, regardless of whether the headlines are negative. Any pullbacks have been viewed as an opportunity to buy a brand name at a discount in an up market.
On the flip side, there has been a worrisome tendency for these bellwether names to beat on the bottom line while missing on the top line. With each earnings release from those blue-chip companies that are supposed to gauge the health of the U.S. economy in terms of manufacturing and exports of finished goods, the market keeps rewarding cost-cutting measures while ignoring the paltry organic growth.
I’m OK with this acceptance of sub-par revenue performance — as long as we get to the other side of the soft patch and see these industries re-accelerate growth later in the year. In the meantime, though, names that are showing growth and beating the Street make good and timely sense.
That’s why I’m happy to see that Navios Maritime Partners LP (NYSE:NMM) is continuing to report upbeat revenues and shrinking expenses, even in a sector that can be uncertain.
Clearly the best-managed of all the dry-bulk shipping companies, NMM delivered Q1 results last week that had shares up nicely. Highlights of Thursday’s release include $50.3 million in quarterly revenue — a 4.8% improvement that beat analyst forecasts — as well as a $31.2 million boost (5.4%) to quarterly operating surplus.
That latter point is all the more impressive considering Navios acquired four new shipping vessels during the period. According to Chairman and CEO Angeliki Frango, these acquisitions, which will be delivered in Q4 2013, are expected to command “more favorable rates than the current market” — another plus.
Shares of NMM have cleared their 200-day moving average on the news, and more upside momentum is firmly in place. As for Navios’ hefty 11.6% payout, the next ex-dividend date is in just a few days, on May 8. In this environment, NMM is a great buy under $17.
Bryan Perry is editor of Cash Machine, a newsletter focused on dividends and income investing. His newest service, Extreme Income, also focuses on dividend investing with “income boosters” like momentum plays, option strategies, and more.