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Here’s a sad truth about the recent global pandemic: while many companies suffered and experienced difficult times, some companies flourished. Global Ship Lease (GSL - Free Report) , a Zacks Rank #1 (Strong Buy) stock, is one such company and continues to outperform the market. The stock has surged more than 950% since the pandemic-induced market plunge back in March of 2020 and continues to make new highs.
Company Description
Global Ship Lease owns and operates containerships under long-term, fixed-rate charters to world class container shipping companies. GSL owns a diversified fleet of over 65 containerships of varying sizes. The company commenced operations in 2007 and is based in London. It was first listed on the New York Stock Exchange in 2008.
GSL is a component of the Zacks Transportation – Shipping industry, which is ranked in the top 33% out of approximately 250 industry groups. The stocks within this industry group are experiencing positive earnings estimate revisions, which is the most powerful force impacting stock prices. Also note the favorable relative valuation traits for this industry group:
Image Source: Zacks Investment Research
Quantitative research studies suggest approximately half of a stock’s future price appreciation is due to it industry grouping. Investing in stocks within leading industry groups can provide a constant ‘tailwind’ to our investing success. GSL also boasts a top overall Zacks VGM Style Score rating of ‘A’, reinforcing its place as a top stock during this difficult market environment.
Earnings Trends and Future Estimates
GSL has exceeded earnings estimates in nine out of the past ten quarters. Two weeks ago, the containership operator reported Q4 EPS of $1.84, a +46.03% beat over the $1.26 consensus. This compares favorably to last year’s $0.38 in the same quarter. The stock has been on a tear, climbing over 80% from a year ago and up 21.2% in 2022.
Global Ship Lease, Inc. Price and EPS Surprise
Over the last four quarters, GSL has posted a +44.62% average earnings surprise. Despite the impressive performance, GSL is still relatively undervalued (3.53 forward P/E) versus its industry group (4.0). Global Ship Lease is also displaying some promising characteristics as shown below:
Image Source: Zacks Investment Research
Analysts are in agreement in terms of recent earnings estimate revisions and have upped their Q1 (+24.84%), Q2 (+27.4%), and full-year (+7.15%) EPS estimates in the past 60 days. The 2022 EPS Zacks Consensus Estimate now stands at $7.79, reflecting potential growth of 60.29% relative to last year.
Charting the Course
GSL has risen from $2.49/share back in March 2020 to $27.25 at the time of this writing. Only stocks that are in extremely powerful uptrends are able to make this type of price move. The stock has continued its winning ways over the past few months while the market has been in correction mode. This is the kind of stock we want to include in our portfolio – one that is trending well and experiencing positive earnings estimate revisions.
Image Source: StockCharts
Notice how the 50, 100, and 200-day moving averages as evidenced by the blue, red, and green lines respectively are all sloping up. Also note that the 100-day MA has acted as support several times throughout the past year. The stock is making a series of higher highs and is showing relative strength versus the market. With both strong fundamentals and technicals, GSL has been of the pandemic’s biggest beneficiaries.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. And as we know, Global Ship Lease has seen a steady batch of positive revisions as of late. As long as this trend remains intact (and GSL continues to post earnings beats), the stock should continue its bullish run this year.
Bottom Line
Containership operators have been substantial beneficiaries of the pandemic, and GSL is no exception. The shipping industry in general has served as a great way to diversify and has been one of the pockets of the market that has been working lately. Buoyed by an undervalued and leading industry group, it’s not difficult to see why GSL is a compelling investment.
A history of positive earnings surprises along with a strong technical trend certainly warrant a closer look at this top stock. Recent positive earnings estimate revisions should also serve to create a ‘floor’ in terms of any sudden or unexpected downside moves. If you haven’t already done so, make sure to put GSL on your shortlist.
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Bull of the Day: Global Ship Lease, Inc. (GSL)
Here’s a sad truth about the recent global pandemic: while many companies suffered and experienced difficult times, some companies flourished. Global Ship Lease (GSL - Free Report) , a Zacks Rank #1 (Strong Buy) stock, is one such company and continues to outperform the market. The stock has surged more than 950% since the pandemic-induced market plunge back in March of 2020 and continues to make new highs.
Company Description
Global Ship Lease owns and operates containerships under long-term, fixed-rate charters to world class container shipping companies. GSL owns a diversified fleet of over 65 containerships of varying sizes. The company commenced operations in 2007 and is based in London. It was first listed on the New York Stock Exchange in 2008.
GSL is a component of the Zacks Transportation – Shipping industry, which is ranked in the top 33% out of approximately 250 industry groups. The stocks within this industry group are experiencing positive earnings estimate revisions, which is the most powerful force impacting stock prices. Also note the favorable relative valuation traits for this industry group:
Image Source: Zacks Investment Research
Quantitative research studies suggest approximately half of a stock’s future price appreciation is due to it industry grouping. Investing in stocks within leading industry groups can provide a constant ‘tailwind’ to our investing success. GSL also boasts a top overall Zacks VGM Style Score rating of ‘A’, reinforcing its place as a top stock during this difficult market environment.
Earnings Trends and Future Estimates
GSL has exceeded earnings estimates in nine out of the past ten quarters. Two weeks ago, the containership operator reported Q4 EPS of $1.84, a +46.03% beat over the $1.26 consensus. This compares favorably to last year’s $0.38 in the same quarter. The stock has been on a tear, climbing over 80% from a year ago and up 21.2% in 2022.
Global Ship Lease, Inc. Price and EPS Surprise
Over the last four quarters, GSL has posted a +44.62% average earnings surprise. Despite the impressive performance, GSL is still relatively undervalued (3.53 forward P/E) versus its industry group (4.0). Global Ship Lease is also displaying some promising characteristics as shown below:
Image Source: Zacks Investment Research
Analysts are in agreement in terms of recent earnings estimate revisions and have upped their Q1 (+24.84%), Q2 (+27.4%), and full-year (+7.15%) EPS estimates in the past 60 days. The 2022 EPS Zacks Consensus Estimate now stands at $7.79, reflecting potential growth of 60.29% relative to last year.
Charting the Course
GSL has risen from $2.49/share back in March 2020 to $27.25 at the time of this writing. Only stocks that are in extremely powerful uptrends are able to make this type of price move. The stock has continued its winning ways over the past few months while the market has been in correction mode. This is the kind of stock we want to include in our portfolio – one that is trending well and experiencing positive earnings estimate revisions.
Image Source: StockCharts
Notice how the 50, 100, and 200-day moving averages as evidenced by the blue, red, and green lines respectively are all sloping up. Also note that the 100-day MA has acted as support several times throughout the past year. The stock is making a series of higher highs and is showing relative strength versus the market. With both strong fundamentals and technicals, GSL has been of the pandemic’s biggest beneficiaries.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. And as we know, Global Ship Lease has seen a steady batch of positive revisions as of late. As long as this trend remains intact (and GSL continues to post earnings beats), the stock should continue its bullish run this year.
Bottom Line
Containership operators have been substantial beneficiaries of the pandemic, and GSL is no exception. The shipping industry in general has served as a great way to diversify and has been one of the pockets of the market that has been working lately. Buoyed by an undervalued and leading industry group, it’s not difficult to see why GSL is a compelling investment.
A history of positive earnings surprises along with a strong technical trend certainly warrant a closer look at this top stock. Recent positive earnings estimate revisions should also serve to create a ‘floor’ in terms of any sudden or unexpected downside moves. If you haven’t already done so, make sure to put GSL on your shortlist.