3 Oversold Shipping Stocks That Could Stay Afloat

The dry bulk shipping industry is volatile in the best of times but the past five years have been particularly challenging. The global pandemic and escalating geopolitical tensions, coupled with the recent catastrophic collapse of Baltimore’s Francis Scott Key bridge has only added to the industry’s concerns, potentially creating even more shipping delays. 

It’s important to note that the struggles of the shipping industry are not recent developments. The Baltic Dry Index (BDI), which tracks shipping rates, reached its peak in 2008, soaring above 11,000 points. Since then, it sharply declined, and the highest level seen since then was approximately 5,100 points in October 2021. 

Currently, the BDI stands at around 1,700 points. While this may not seem particularly impressive, it represents a 6% increase over the last five years. With numerous factors potentially driving up shipping costs, now is an opportune time to explore investments in the often overlooked or underappreciated sector.  

Below are three penny stocks from the shipping industry that have seen better days but possess significant upside potential due to upcoming catalysts. 

This Company Is Adding To Its Fleet 

Globus Maritime (NASDAQ: GLBS) is currently trading below $2 per share and is down more than 25% in 2024. This recent decline came after the stock initially benefited from a spike in the Baltic Dry Index (BDI) following the Red Sea seizure. Currently, the stock is hovering around its 50-day simple moving average (SMA) and is well above its 200-day SMA, indicating potential stabilizing factors for future performance. 

Globus recently expanded its fleet from six to seven ships through the acquisition of a new Ultramax Dry Bulk Vessel named the Glbs Hero. This vessel boasts a capacity of 64,000 dry weight tonnes (DWT), increasing the company’s total fleet capacity to approximately 517,745 DWT. 

The company is not stopping there; plans are in place to add four more ships to its fleet by 2026. These additions are expected to contribute an additional 256,000 DWT, solidifying Globus Maritime’s competitive edge with a more modern and energy-efficient fleet. 

This Company Is Banking On Addition By Subtraction 

Castor Maritime (NASDAQ: CTRM) has seen its stock plummet by over 57% in the past year, mostly due to compliance issues with the Nasdaq exchange that nearly led to its shares being delisting for trading below $1 per share. To rectify this situation, Castor Maritime opted for a “less bad” solution, executing a 1-for-10 reverse stock split. This move mathematically brought the company back into compliance and provided additional time to improve its financial health and convince investors it is on the right track. 

Just days before announcing the reverse split, Castor Maritime sold two of its ships, which reduced its fleet to about a dozen carriers. The asset sale generated $31.9 million which is being allocated to strengthen its balance sheet. This injection of capital is timely, as it positions Castor Maritime to capitalize on potential opportunities for growth should the shipping industry experience a rebound. 

This Shipping Company May Represent The Best Value  

Diana Shipping (NYSE:DSX) presents perhaps the most compelling value proposition in the volatile and competitive shipping sector, with its stock price hovering around $2.88 per share. Despite industry-wide market challenges, Diana Shipping boasts the largest fleet among the companies mentioned above, comprising 40 vessels with plans to add two methanol dual-fuel new-building Kamsarmax dry bulk vessels. 

However, the company’s revenue and earnings have been in decline for several quarters, casting shadows over its financial stability. These concerns could ease if shipping rates normalize as anticipated.  

Unlike its peers, Diana Shipping offers an additional incentive to investors—a dividend. Currently, the dividend’s payout ratio is approximately 69%, which may raise sustainability concerns. Nevertheless, this dividend provides a better reason for investors to consider Diana over its peers, especially with analysts projecting an impressive 106% earnings growth over the next 12 months.