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Strengthening charter rates are buoying dry bulk shippers

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Star Bulk Carriers

Star Bulk Carriers NASDAQ:SBLKMarket Cap: $53 million
YTD Return: 59%

All of the cautions about small-cap shipping stocks applies in an equal degree for Star Bulk Carriers (SBLK) — again, so does the potential upside.

In addition to the good news for dry bulk charter rates in general, Star posted a net profit of $800,000 in the second quarter — not much by most standards, but a significant improvement compared to the $4.6 million loss during the same quarter last year.

Star Bulk has an operating fleet of 13 dry bulk carriers — five Capesize and eight Supramax vessels — as well as six additional third-party dry bulk ships currently under management.  Speaking of management, President and CEO Spyros Capralos has done a great job of getting his company ship-shape this year. “Star Bulk is a completely different company,” he said recently.

SBLK is well-managed, cheap and has potential for significant upside. The company raised $80.1 million in an equity offering earlier this year, and its earnings outlook is improving. The majority of the funds raised are being used to fund the purchase price for two Capesize ships and two Ultramax vessels. Star Bulk also made a strategic shift to offering third-party ship management — an area that company officials say is beginning to produce tangible results.

If SBLK stays on course and charter rates continue to rise, it could reward investors handsomely.

As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned stocks. 

Article printed from InvestorPlace Media,

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