A quick glance at Thursday’s biggest gainers and losers reveals that the shipping industry is a complete mess right now. Several notable stocks in this sector, including DryShips , Global Ship Lease (GSL - Free Report) , and Diana Containerships , are either soaring or plummeting, as many investors feel a recently-formed bubble is bursting.
Shares of DryShips, which were halted for the entirety of Wednesday, plunged more than 66% in morning trading Thursday. The Greece-based carrier company announced that it had entered into an agreement to sell convertible preferred securities worth about $20 million.
On the other hand, Global Ship Lease soared more than 25%; the stock has now doubled over the last three days of trading. Diana Containerships was also rallying recently—the stock gained about 450% on the week at Wednesday’s close—but shares plummeted nearly 40% on Thursday.
Globus Maritime (GLBS - Free Report) , which grew eight-fold over the past week, also came back down to Earth on Thursday; the stock was down about 45% at noon. Other shipping companies, however, maintained their momentum. Rand Logistics and Sino-Global Shipping America surged about 41% and 8%, respectively.
So what the heck is going on with shipping companies this week? A recent note from Wells Fargo analysts Michael Webber suggests that this industry is being affected by a bubble created by algorithm-based trading.
“While we believe retail momentum and short covering likely got this trade going, given the sheer size of the volume and the continued (relentless) pricing movements, we believe momentum-based algorithms--quant trading--are likely a very significant factor/catalyst at this point,” Webber noted.
“We believe this is important to note, given that if these moves were purely a retail momentum trade, the incremental value created could have relatively more staying power than a more quant driven flash (esque) bubble.”
Long story short, these shipping stocks are going absolutely crazy right now. If you are a brave investor, perhaps there are some short-term plays to be made here, but the sheer volatility of these stocks is enough to keep me away for now.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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A quick glance at Thursday’s biggest gainers and losers reveals that the shipping industry is a complete mess right now. Several notable stocks in this sector, including DryShips , Global Ship Lease (GSL - Free Report) , and Diana Containerships , are either soaring or plummeting, as many investors feel a recently-formed bubble is bursting.
Shares of DryShips, which were halted for the entirety of Wednesday, plunged more than 66% in morning trading Thursday. The Greece-based carrier company announced that it had entered into an agreement to sell convertible preferred securities worth about $20 million.
On the other hand, Global Ship Lease soared more than 25%; the stock has now doubled over the last three days of trading. Diana Containerships was also rallying recently—the stock gained about 450% on the week at Wednesday’s close—but shares plummeted nearly 40% on Thursday.
Globus Maritime (GLBS - Free Report) , which grew eight-fold over the past week, also came back down to Earth on Thursday; the stock was down about 45% at noon. Other shipping companies, however, maintained their momentum. Rand Logistics and Sino-Global Shipping America surged about 41% and 8%, respectively.
So what the heck is going on with shipping companies this week? A recent note from Wells Fargo analysts Michael Webber suggests that this industry is being affected by a bubble created by algorithm-based trading.
“While we believe retail momentum and short covering likely got this trade going, given the sheer size of the volume and the continued (relentless) pricing movements, we believe momentum-based algorithms--quant trading--are likely a very significant factor/catalyst at this point,” Webber noted.
“We believe this is important to note, given that if these moves were purely a retail momentum trade, the incremental value created could have relatively more staying power than a more quant driven flash (esque) bubble.”
Long story short, these shipping stocks are going absolutely crazy right now. If you are a brave investor, perhaps there are some short-term plays to be made here, but the sheer volatility of these stocks is enough to keep me away for now.
Stocks that Aren't in the News. Yet.
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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