The shipping industry has shown resilience in 2022. The Dow Jones U.S. Marine Transport index is up by less than 1% but hasn’t dropped below its January opening value all year. That’s good news for anyone looking for shipping stocks to buy now.
According to the International Chamber of Shipping, “some 11 billion tons of goods are transported by ship each year. This represents an impressive 1.5 tons per person based on the current global population.”
Shipping has many advantages as a form of long-distance transport. Primary among these are the ability to transfer goods in large volumes, lower costs compared to other methods of transportation and ease of transfer for raw materials and commodities like iron ore and oil that present challenges via other methods.
The shipping industry faces many challenges. The war in Ukraine has made exports of agricultural products impossible, and the pandemic caused lockdowns and a supply-demand imbalance in goods. Also, the shipping industry is subject to economic and business cycles.
These three shipping stocks to buy now offer value and growth prospects in an industry that shows plenty of momentum and strength in 2022.
|NMM||Navios Maritime Partners||$24.77|
|GRIN||Grindrod Shipping Holdings||$19.83|
Danaos Corporation (DAC)
Danaos Corporation stock trades at a price-to-earnings (P/E) ratio of only 1.3 and offers a forward dividend yield of 4.5%. Analysts are highly bullish, as they have a one-year target of $122.50, an upside potential of 77%. The stock is moderately down in 2022 with losses of nearly 8%.
Business is strong as in 2021 revenue grew 49.37% to $689.51 million and profitability soared 585.67% to $1.05 billion. Danaos has consistently generated positive free cash flows, despite declining for the past two consecutive years.
A price-to-earnings growth (PEG) ratio of 0.01 makes DAC stock a value shipping stock.
Navios Maritime Partners (NMM)
The stock is mostly flat in 2022 with a loss of less than 2%, but that may not last much longer, as the financials show a strong business performance. The sales growth has grown for the past two consecutive years, as sales growth of 3.37% in 2020 accelerated to 214.49% in 2021 to $713.18 million. In 2021, the shipping company turned profitable posting a net income growth of 838.04% to $505.86 million. The free cash flow trend is positive as of 2019.
The shares trade at a P/E ratio of 1.6 and have a forward dividend yield of 0.8%. That may not seem much, but on the other hand, the 1-year target of $45 signals an upside potential of 82%.
Grindrod Shipping Holdings (GRIN)
Grindrod Shipping Holdings (NASDAQ:GRIN) is an international shipping company based in Singapore. It ships dry bulk as well as liquid chemicals and oil.
Grindrod Shipping stock has gains of approximately 8% in 2022 and offer a high forward dividend yield of 9.8%. It gets even better, as the stock trades at a P/E ratio of 2.7.
The company’s sales growth is volatile, but in 2021 it surged 116.36% to $455.84 million. 2021 has been a year of inflection for this shipping company as it turned profitable. When a company like Grindrod Shipping Holdings delivers a huge net income growth after a series of net losses, this is something to pay attention to. The dynamics of the business have improved a lot, and this is supportive of the stock price. In 2021, net income growth was 473.68% to $122.09 million.
An improved positive free cash flow trend in the past two years and a forward price-to-sales ratio of 0.72 build a bullish thesis. It is another value shipping stock that pays a large dividend yield in uncertain economic times.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.