It seems odd to be analyzing the best shipping stocks as recession concerns continue to pile up in 2022. Further, any recession will likely last well into 2023 and come with a much harder landing than the Federal Reserve would like.
With shipping rates down from record levels, it’s also unsurprising that many shipping stocks have been whacked hard this year. But that may be an opportunity. According to the International Chamber of Shipping, 90% of world trade flows through the maritime shipping industry — an industry that’s headed by many publicly traded companies.
This is a very volatile sector, but it’s essential to the world’s supply chain. Still, when looking for the best shipping stocks, investors should consider companies with strong balance sheets and proven track records or competitive advantages in the space.
So, without further ado, here are seven of the best shipping stocks for investors to consider.
AP Møller Mærsk (AMKBY)
An already rough 2022 got worse for AP Møller Mærsk (OTCMKTS:AMKBY) stock when Citigroup downgraded it to a “sell” rating in August. Soon after, AMKBY stock got a similar downgrade in late September, then subsequent downgrades from other firms in October and November.
So, why is this play on a list of best shipping stocks? It’s still an unquestioned leader in the sector, with over 700 ships and a market share of nearly 17% as of April 2022. The company counts names like Walmart (NYSE:WMT) and Nike (NYSE:NKE) among its clients.
Of course, the stock has been under pressure. In September, the company said it would slow down its ships to reduce fuel costs, for instance. But in an interview with Reuters, CEO Soren Skou projected a “modest” increase in demand for the holiday season. Overall shipping rates, although coming down, remain above pre-pandemic levels as well.
ZIM Integrated Shipping (ZIM)
Next on my list of best shipping stocks is ZIM Integrated Shipping (NYSE:ZIM). The story with ZIM stock is consistent with many others on this list; shipping rates are being forecast lower. That was enough for Citi to lower this stock’s rating to “neutral” back in August. Several other analysts have also lowered their price targets since then.
The result is that ZIM stock is down more than 50% year-to-date (YTD). But this may be a case of the market being gripped by fear, uncertainty and doubt (FUD). The company continues to deliver strong growth in earnings and revenue. While revenue and earnings are expected to decline in the coming years, revenue is still expected to be above pre-pandemic levels.
That’s the real takeaway here. The company scores well in both valuation and profitability. If the recession is worse than feared, it may be time to reassess ZIM and other shipping stocks. Otherwise, though, these shares may be worth a speculative buy.
Global Ship Lease (GSL)
Looking at the stock chart for Global Ship Lease (NYSE:GSL) may be enough to make you sea sick. Shares have seen plenty of volatility. As of this writing, GSL stock is down more than 20% YTD.
This U.K.-based company owns and charters containerships under fixed-rate two- to five-year charters to companies like Mærsk. This allows Global Ship Lease to get many of the benefits of the sector while managing the downside risk. In August, the company announced a multi-year deal to charter six more ships, which it said would aggregate $393 million of EBITDA.
So far, the bearish sentiment in the broader market seems to be weighing on GSL stock. However, that could make shares attractive for investors to get in now. The stock has a trailing price-to-earnings (P/E) ratio of around 2 times and a dividend yield of about 8%.
Genco Shipping & Trading (GNK)
Genco Shipping & Trading (NYSE:GNK) is a counterpart to Global Ship Lease. The company transports many of the commodities — such as nickel and iron ore — that will continue to be in high demand in the emerging growth sectors of the world economy.
Genco checks off many of the boxes that value investors look for. It is growing earnings and revenue on a year-over-year (YOY) basis. Genco also supplies a healthy dividend.
GNK stock has been being dragged down by recession fears. However, like many of the other picks on this best shipping stocks list, those concerns seem to be priced in. Opportunistic investors should consider it closely.
Star Bulk Carriers (SBLK)
Star Bulk Carriers (NASDAQ:SBLK) has a fleet of 128 carriers that transports dry goods around the world. Like many shipping companies, Star Bulk also saw unprecedented demand drive up SBLK stock for much of 2020 and 2021.
However, 2022 has been a different story. The stock is down more than 10% YTD. Still, the company has consistent YOY growth in revenue and earnings. Plus, analysts’ consensus price target suggests roughly 50% from the stock’s $20 price tag as of this writing.
Finally, this company currently pays a dividend with a 25% yield and an annual payout of $4.80, per Seeking Alpha. While that may not continue to be the case in the future, the current risk-off market, likely capital appreciation and today’s dividend all make SBLK stock an attractive choice.
GasLog Partners (GLOP)
GasLog Partners (NYSE:GLOP) makes this list of best shipping stocks because it services a niche that will be in high demand this upcoming winter. Specifically, the war in Ukraine has created an energy crisis in Europe. In response, many oil and gas companies are working to supply liquefied natural gas (LNG) to Europe.
That’s where GasLog Partners comes in. This Greece-based company owns, operates and manages a large fleet of carriers. It provides support for many international energy companies, including Shell (NYSE:SHEL).
According to some industry estimates, demand for LNG is expected to rise at a compound annual growth rate (CAGR) of 8.1% through from 2022 to 2030. That positions GasLog Partners well, since it business model typically sees it charter vessels under long-term contracts.
Similar to GasLog Partners, Teekay (NYSE:TK) ships LNG as well as other petroleum products. Russia’s invasion of Ukraine has created a catalyst for Teekay due to its stake in Teekay Tankers (NYSE:TNK), an owner and operator of mid-size crude tankers.
Currently, TK stock is up more than 30% YTD, having climbed particularly sharply in the past few months. That reflects a ramp-up amid Europe’s energy crisis. Interested investors may be able to ride this momentum.
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On the date of publication, Chris Markoch did not hold (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.