The shipping sector is booming due to higher global trade demand. Moreover, increased international maritime freight transport and trade agreements are driving the need for efficient shipping services.
Therefore, I think investors could consider quality shipping stocks TORM plc (TRMD), International Seaways, Inc. (INSW), and Navios Maritime Partners L.P. (NMM). These stocks are also trading above their 50-day moving averages, indicating an uptrend.
Maritime Strategies International (MSI) predicts a consistent 7% annual fleet growth for 2023 and 2024. There's potential for expansion up to 10% in 2025, assuming minimal vessel scrapping. This growth projection signals positive prospects for the shipping industry, indicating increased demand for shipping services.
In addition, the increased need for quicker and more efficient customer services is a major driver behind the growth of the digital shipping industry. Also, the rising demand for fast and streamlined logistics services is expected to fuel market growth. The global digital shipping market is projected to grow at a CAGR of 21.8% until 2027.
Furthermore, advanced cargo ships with state-of-the-art technology like sensors and navigation systems, developed by industry leaders, are boosting global demand for maritime transportation and driving growth in the cargo shipping market.
As a result, the global cargo shipping market is projected to reach $4.20 trillion by 2031, growing at a CAGR of 7%.
Take a look at the stocks mentioned above:
TORM plc (TRMD)
Headquartered in London, United Kingdom, TRMD is engaged in transporting refined oil products and crude oil through its two operating segments: Tanker and Marine Exhaust. The company transports gasoline, jet fuel, naphtha, and gas oil, dirty petroleum products, such as fuel oil, and also engages in the production of advanced and green marine equipment.
While TRMD has a four-year average dividend yield of 5.78%, the company pays an annual dividend of $5.84, which translates to a 22.24% yield of the current price level. In addition, the company has raised its dividend payment at a CAGR of 213.9% over the past five years.
TRMD’s revenue increased 86.3% year-over-year to $390.20 million in the fiscal first quarter that ended March 31, 2023. The company’s EBIT and EBITDA rose 623.5% and 228.6% year-over-year to $163.50 million and $198.50 million. Additionally, its net profit for the quarter grew significantly year-over-year to $153.60 million.
Analysts expect TRMD’s EPS to increase 2.5% year-over-year to $6.79 in the fiscal year 2023. The company has an excellent earnings surprise history, as it surpassed the consensus revenue estimates in each of the trailing four quarters.
Shares of TRMD have gained 41.9% over the past year to close the last trading session at $26.54. Moreover, TRMD trades higher than its 50-day moving average of $24.45, indicating an uptrend.
TRMD’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has a grade of A for Momentum and a B for Value and Quality. The stock is ranked #9 among 44 stocks in the A-rated Shipping industry.
Click here for additional ratings of TRMD (Growth, Stability, and Sentiment).
International Seaways, Inc. (INSW)
INSW owns and operates a fleet of oceangoing vessels for the transportation of crude oil and petroleum products in the international flag trade. It operates in two segments: Crude Tankers and Product Carriers.
On August 9, INSW declared a combined dividend of $1.42 per share composed of a supplemental dividend of $1.30 per share in addition to a regular quarterly cash dividend of $0.12 per share, to be paid in September 2023.
INSW’s annual dividend of $2.36 yields 5.21% at the current price level, higher than its four-year average dividend yield of 4.02%. Over the past three years, INSW’s dividend payouts have grown at a CAGR of 58.7%.
In the fiscal second quarter that ended June 30, 2023, INSW’s total shipping revenue increased 55.3% year-over-year to $292.20 million. Its net income rose 122.7% from the previous-year quarter to $153.76 million. Also, its EPS came in at $3.11, up 125.4% from the year-ago quarter.
Its EPS and revenue are expected to grow 37% and 23.3% year-over-year to $10.47 and $1.05 billion in the fiscal year 2023. Also, it has surpassed the EPS and revenue estimates in three of the four trailing quarters, which is remarkable.
The stock has gained 75.7% over the past year and 31.8% year-to-date to close its last trading session at $44.93. It is trading above its 50-day and 200-day moving averages of $38.99 and $40.63, indicating an uptrend.
It’s no surprise that INSW has an overall B rating, equating to a Buy in our POWR Ratings system.
It also has an A grade for Momentum and a B for Growth and Quality. It is ranked #13 in the same industry.
In addition to the POWR Ratings stated above, one can access additional INSW’s Value, Sentiment, and Stability ratings here.
Navios Maritime Partners L.P. (NMM)
Based in Monaco, NMM owns and operates dry cargo vessels in various parts of the world. The company provides seaborne transportation services for a range of dry cargo commodities, including iron ore, coal, grain, fertilizers, containers, and charters its vessels under medium to long-term charters.
On July 26, NMM declared a cash distribution of $0.05 per unit for the quarter ended June 30, 2023. This distribution represents an annualized distribution of $0.20 per unit, which translates to a 0.85% yield on the prevailing price level. Its four-year average dividend yield is 4.92%.
NMM’s revenue increased 10.6% year-over-year to $65.41 million in the fiscal first quarter that ended March 31. The company reported a net income attributable to NMM of $14.47 million and $0.25 per share, compared to a loss of $5 million and $0.28 per share in the previous-year quarter.
The consensus revenue estimate of $318 million for the fiscal second quarter that ended June 2023 indicates an increase of 13.3% year-over-year.
NMM gained 4% over the past month to close the last trading session at $23.55. Its shares are trading above their 50-day moving average of 22.32, indicating an uptrend.
NMM’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is rated an A grade in Value and a B in Momentum, Sentiment, and Quality. In the Shipping industry, it is ranked #8.
To access NMM’s Stability and Growth ratings, click here.
What To Do Next?
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TRMD shares rose $0.76 (+2.86%) in premarket trading Wednesday. Year-to-date, TRMD has gained 0.02%, versus a 16.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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