Cyprus-based company Castor Maritime (NASDAQ:CTRM) operates in the dry bulk shipping market. That might sound exotic, but CTRM stock is quite popular among penny stock traders in the United States.
I’m not calling it a penny stock to be derogatory. The definition of a penny stock is clarified by the U.S. Securities and Exchange Commission as a stock that’s trading for less than $5.
Since CTRM stock is a low-priced asset, it’s prone to bouts of volatility. Therefore, it’s generally not appropriate for large position sizes.
For small allocations, however, it offers the potential for quick gains under the right circumstances. So, let’s board this vessel and see where Castor Maritime can take us in 2021.
A Closer Look at CTRM Stock
If we go back far enough in time, we can see that CTRM stock wasn’t always in penny-stock territory. Indeed, at one point in 2019, the shares were trading at $6.40 apiece.
For all I know, the stock might get there again someday. For the time being, though, the bulls are struggling to reach the $1 level.
They did achieve this feat earlier in 2021. Amazingly, the buyers bid the CTRM stock price up from 20 cents in early January to a 52-week high of $1.95 on Feb. 11.
Unfortunately, the share price has declined sharply since that time, and today it should open at around 50 cents per share.
This could be viewed as a good entry point, though, if you’ve been waiting for CTRM stock to retrace from its peak price.
I should also offer a word of caution here. Currently, Castor Maritime’s trailing 12-month earnings per share is around -3 cents.
That’s not a deeply negative number, but the stakeholders will definitely want to see it turn positive at some point this year.
Watch for Vessel Acquisitions
As we’ve seen, CTRM stock is capable of spiking quickly, to the point of producing 2x, 3x, or even greater gains.
This could happen again at any moment, but it’s important to stay on top of the latest developments with the company.
One type of event to watch for is vessel acquisitions. It’s surely not a coincidence that Castor Maritime shares catapulted upwards earlier this year, while the company was acquiring multiple ships.
While the stock was racing towards its 52-week high, the following events were taking place:
- Jan. 20, 2021: Castor Maritime entered, through a subsidiary, into an agreement to purchase a 2006 Japan-built Capesize dry bulk carrier.
- Feb. 1: Through a subsidiary, Castor Maritime committed to buy a 2010 Japan-built Kamsarmax dry bulk carrier.
- Feb. 3: The company, through a subsidiary, agreed to purchase a 2009 Japan-built Kamsarmax dry bulk carrier.
- Feb. 11: Castor Maritime announced that it had entered, through two subsidiaries, into agreements to purchase two 2005 Korean-built Aframax LR2 tankers.
Keep Your Eye on This Indicator
Of course, the company won’t be able to go on a buying spree every month.
Still, the next time Castor Maritime acquires multiple shipping vessels, we might see another powerful spike in the share price.
There’s another indicator you should be monitoring while you’re on the lookout for vessel purchases. It’s a metric that’s well-known to international maritime shipping aficionados.
I’m referring to the Baltic Exchange Dry Index. This gives a general indication of the rates that ocean-bound shippers can get for hauling dry- bulk goods.
Notably, CTRM stock jumped 12% on March 8. Around that same time, the Baltic Exchange Dry Index was surging higher.
Naturally, a spike in the Baltic Exchange Dry Index will typically provide a tailwind to ocean-bound shipping companies generally. As they say, a rising tide lifts all boats.
The Bottom Line
So now, you have an idea of what to watch for if you’re planning to trade CTRM stock for a potential quick gain.
Just be aware that the stock is quite volatile. Therefore, please don’t load the boat on Castor Maritime shares.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
