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The Zacks Transportation - Shipping industry performed impressively in 2023 despite headwinds like inflationary pressures, resultant high interest rates, increased fuel prices and supply-chain disruptions.
However, the improvement in the demand scenario with respect to goods and commodities from pandemic lows bodes well for this key industry. This is because the shipping industry is responsible for transporting the bulk of goods involved in the world trade.
The primary tailwind responsible for the 16% gain of the shipping industry in 2023 was the upbeat demand for liquefied petroleum gas. The re-opening of the China economy has also boosted the industry participants.
We believe that 2024, too, will have encouraging tidings for shipping stocks. Consequently, we expect that investors should have stocks like Dorian LPG, EuroDry and Kirby Corp. in their portfolios.
Factors Working in Favor of the Shipping Industry
The upbeat export of liquefied petroleum gas like propane served the U.S. economy well in 2023, in turn boosting transporters of liquefied petroleum gas like Dorian. Notably, the United States is the largest exporter of liquefied petroleum gases like propane and butane. Sea-borne liquefied petroleum gas volumes have been on the rise during the pandemic and afterward.
The increased availability of propane for export in 2023 has been a huge positive. On the residential front, propane is used for heating and cooking. On the commercial front, propane is supplied to Asian propane dehydration or PDH plants for producing polypropylene. Polypropylene finds use in producing plastics.
Capacity restriction of the Panama Canal, induced by low freshwater levels, has lengthened large gas carriers or VLGC voyages due to the rerouting of liquefied petroleum gas shipping flows. These restrictions are compelling ships to take long detours via the Suez Canal and Cape of Good Hope, resulting in increased spot rates. Spot rates are likely to remain high, with the congestion at the Panama Canal expected to persist.
With the reopening of the China economy, the entire shipping industry heaved a sigh of relief. Notably, ocean shipping is hugely dependent on China. This is because China is not only a key manufacturing hub but also sees significant demand for goods and services, courtesy of the country's large population.
Investing in Shipping Stocks: A Prudent Idea
With things looking up for the shipping industry in 2024, driven by the above-mentioned tailwinds, placing bets on sound stocks like Dorian,EuroDry and Kirby seems judicious.
These stocks currently sport a Zacks Rank #1 (Strong Buy) or 2 (Buy), and have witnessed favorable earnings estimate revisions for 2024. All three stocks have gained in double-digits in 2023.
Dorian LPG operates a fleet of VLGCs for transporting liquefied petroleum gases like propane and butane on long-haul voyages, mainly from the United States/ Middle East to Asia. The increased demand for liquefied petroleum gases from Asia has been a huge positive for the company headquartered in Stamford, the stock of which surged 131.5% in 2023.
Dorian currently flaunts a Zacks Rank #1 and has a Growth Score of B. The Zacks Consensus Estimate for its 2024 earnings has surged 136.5% over the past 60 days.
EuroDry also currently sports a Zacks Rank #1. The Greece-headquartered company owns and operates drybulk vessels, and provides sea-borne transportation for drybulk cargoes. Its efforts to expand its fleet are commendable. Moreover, the charter rates in the drybulk market improved for the sub-Capesize vessels amid the Panama Canal congestion.
EDRY shares gained in excess of 10% in 2023. The Zacks Consensus Estimate for its 2024 earnings has surged 93.5% over the past 60 days.
Kirby is being well-served by increased demand in its distribution and services segment. Favorable market conditions at its marine transportation unit are encouraging as well. KEX currently carries a Zacks Rank #2.
The optimism surrounding the stock can be gauged from the fact that KEX shares gained in excess of 21% in 2023. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved almost 1% north.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Dorian LPG, EuroDry and Kirby
For Immediate Release
Chicago, IL – January 5, 2024 – Today, Zacks Equity Research discusses Dorian LPG (LPG - Free Report) , EuroDry (EDRY - Free Report) and Kirby Corp. (KEX - Free Report) .
Industry: Shipping
Link: https://www.zacks.com/stock/news/2205867/3-impressive-shipping-stocks-worth-betting-on-in-2024
The Zacks Transportation - Shipping industry performed impressively in 2023 despite headwinds like inflationary pressures, resultant high interest rates, increased fuel prices and supply-chain disruptions.
However, the improvement in the demand scenario with respect to goods and commodities from pandemic lows bodes well for this key industry. This is because the shipping industry is responsible for transporting the bulk of goods involved in the world trade.
The primary tailwind responsible for the 16% gain of the shipping industry in 2023 was the upbeat demand for liquefied petroleum gas. The re-opening of the China economy has also boosted the industry participants.
We believe that 2024, too, will have encouraging tidings for shipping stocks. Consequently, we expect that investors should have stocks like Dorian LPG, EuroDry and Kirby Corp. in their portfolios.
Factors Working in Favor of the Shipping Industry
The upbeat export of liquefied petroleum gas like propane served the U.S. economy well in 2023, in turn boosting transporters of liquefied petroleum gas like Dorian. Notably, the United States is the largest exporter of liquefied petroleum gases like propane and butane. Sea-borne liquefied petroleum gas volumes have been on the rise during the pandemic and afterward.
The increased availability of propane for export in 2023 has been a huge positive. On the residential front, propane is used for heating and cooking. On the commercial front, propane is supplied to Asian propane dehydration or PDH plants for producing polypropylene. Polypropylene finds use in producing plastics.
Capacity restriction of the Panama Canal, induced by low freshwater levels, has lengthened large gas carriers or VLGC voyages due to the rerouting of liquefied petroleum gas shipping flows. These restrictions are compelling ships to take long detours via the Suez Canal and Cape of Good Hope, resulting in increased spot rates. Spot rates are likely to remain high, with the congestion at the Panama Canal expected to persist.
With the reopening of the China economy, the entire shipping industry heaved a sigh of relief. Notably, ocean shipping is hugely dependent on China. This is because China is not only a key manufacturing hub but also sees significant demand for goods and services, courtesy of the country's large population.
Investing in Shipping Stocks: A Prudent Idea
With things looking up for the shipping industry in 2024, driven by the above-mentioned tailwinds, placing bets on sound stocks like Dorian,EuroDry and Kirby seems judicious.
These stocks currently sport a Zacks Rank #1 (Strong Buy) or 2 (Buy), and have witnessed favorable earnings estimate revisions for 2024. All three stocks have gained in double-digits in 2023.
Dorian LPG operates a fleet of VLGCs for transporting liquefied petroleum gases like propane and butane on long-haul voyages, mainly from the United States/ Middle East to Asia. The increased demand for liquefied petroleum gases from Asia has been a huge positive for the company headquartered in Stamford, the stock of which surged 131.5% in 2023.
Dorian currently flaunts a Zacks Rank #1 and has a Growth Score of B. The Zacks Consensus Estimate for its 2024 earnings has surged 136.5% over the past 60 days.
You can see the complete list of today's Zacks Rank #1 stocks here.
EuroDry also currently sports a Zacks Rank #1. The Greece-headquartered company owns and operates drybulk vessels, and provides sea-borne transportation for drybulk cargoes. Its efforts to expand its fleet are commendable. Moreover, the charter rates in the drybulk market improved for the sub-Capesize vessels amid the Panama Canal congestion.
EDRY shares gained in excess of 10% in 2023. The Zacks Consensus Estimate for its 2024 earnings has surged 93.5% over the past 60 days.
Kirby is being well-served by increased demand in its distribution and services segment. Favorable market conditions at its marine transportation unit are encouraging as well. KEX currently carries a Zacks Rank #2.
The optimism surrounding the stock can be gauged from the fact that KEX shares gained in excess of 21% in 2023. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved almost 1% north.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.