Quite a few shipping companies have seen their stocks added to the Zacks Rank #1 (Strong Buy) list and are standing out in terms of value.
Bolstering their valuations is that these Zacks transportation-shipping stocks are offering enticing dividends and have seen a positive trend of earnings estimate revisions which suggests more upside.
Cool Company – CLCO
Operating fuel-efficient liquified natural gas carriers, Cool Company (CLCO) is an up and coming shipping stock to watch after launching its IPO at the beginning of 2022.
Checking a “B” Zacks Style Scores grade for Value, CLCO trades at $11 and at a 5.6X forward P/E multiple despite fiscal 2024 EPS projected to dip to $2.03 following a tough-to-compete-against year that saw earnings at $3.25 per share. Still, FY25 EPS is expected to stabilize and rise 3%. Furthermore, FY24 and FY25 EPS estimates are nicely up over the last 60 days and Cool Company’s annual dividend yield is currently at a whopping 14.42%.
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Euroseas – ESEA
With a 5.56% annual dividend, Euroseas (ESEA) stock is very intriguing as a leader in the cargo, dry bulk, and container shipping markets. As one of the stock market’s better performers, ESEA has soared +37% year to date. Plus, at $40 ESEA still trades at just 2.8X forward earnings checking an “A” Style Scores grade for Value.
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While a dip is naturally expected on Euroseas robust bottom line, earnings estimate revisions for FY24 and FY25 have spiked 13% and 49% in the last 30 days respectively.
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ZIM Integrated – ZIM
Last but not least is ZIM Integrated Shipping Services (ZIM) which operates a fleet and network of cargo shipping lines. Seeing a sharp rebound on its bottom line, ZIM trades at 1.8X forward earnings with FY24 EPS expected at $11.22 compared to an adjusted loss of -$5.07 a share last year.
At the moment, ZIM has an “A” Style Scores grade for Value even with FY25 EPS forecasted to drop to a loss -$0.75. That said, with ZIM’s stock at a price tag of $20 the risk to reward looks favorable considering earnings estimates for FY24 and FY25 have skyrocketed in the last two months.
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Although ZIM’s operations are prone to the cyclicality of the broader shipping industry, the company is known to reward shareholders during times of increased profitability and reinstated its dividend with a current yield of 4.35%.
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Bottom Line
Keeping in mind that the plausibility of a lower inflationary environment should further enhance the operating efficiency of many shipping companies, now appears to be an ideal time to buy Cool Company, Euroseas, and ZIM Integrated’s stock.
— Shaun Pruitt
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Source: Zacks