3 shipping stocks to diversify your portfolio

Highlights 

  • The shipping industry plays a crucial role in global trades carrying an estimated USD 4 trillion of goods each year.
  • The shipping industry and the global economy is deeply interlinked. Hence it acts as one of the leading indicators to assess the global economic direction.

The shipping industry plays a crucial role in global trades and is a vital component of the logistics and transport sector. The transportation of cargo, bulk raw materials, oil, and base metals through big floating vessels is known as the maritime shipping industry, which carries an estimated USD 4 trillion of goods each year, representing 90% of international trade flow.

The shipping industry and the global economy is deeply interlinked. Hence the industry acts as one of the leading indicators to evaluate the global economic direction. Baltic Dry Index (BDI) is one of the leading indices to track the shipping industry demand and current price scenario. If the index is stable or on the rise, it indicates the global economy is stable and rising, while a fall in the index indicates lower demand for shipping and different commodities.

The ongoing global economic recovery after the Covid-19 pandemic is beneficial for the shipping industry, as indicated by the Baltic Dry Index, which made a ten-year high in May 2021. In the rising economic scenario, ships can charge higher rates to transport goods. However, economic contraction worldwide would lead to lesser demand for goods leading to lower shipping capacity, adversely impacting revenue and profitability.

 Shipping stocks to invest

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Let us look at FTSE listed stocks that generate their revenue through the shipping industry:

Braemar Shipping Services Plc (LON: BMS)

The company provides ancillary services to the shipping industry like shipbroking, logistics and financial services. It operates in over 60 countries and also provides advice on shipping industry investment and risk management. The company reported an 11% rise in revenue at £47.4 million in the six months ended 31 August 2021. The high revenue growth was contributed by the dry cargo business segment. The company has a positive outlook and expects full-year revenue to exceed the previous year.

Braemar Shipping Services Plc’s current market cap is £73.95 million as of 16 November 2021. In the last one year, the stock has given a 66.64% return to its shareholders.

Clarkson Plc (LON: CKN)

FTSE250 listed company operates as an integrated shipping service provider having offices in 23 countries. The company reported a revenue of £190.1 million, while its underlying profit before tax was £27.5 million for the six months ended 30 June 2021. The Shipbroking business segment contributed the highest revenue at £142.7million. As a result of excellent performance, the company declared an interim dividend of 27p per share.

Clarkson Plc current market cap is £1,209.8 million as of 16 November 2021. In the last one year, the stock has given a 60.12% return to its shareholders.

Ocean Wilsons (Holdings) Ld (LON: OCN)

The company operates as an investment holding company with one of the subsidiaries, Wilson Sons Holdings Brazil S.A. providing maritime services like port terminals, ship agency and other logistics services. For the quarter ended 30 September 2021, the company reported an 18% rise in revenue at USD 104 million primarily due to growth in logistics and strong towage volume, while Wilson Son’s profit after tax was at USD 6.6 million during the period.

Ocean Wilsons’s current market cap is £343.02 million as of 16 November 2021. In the last one year, the stock has given a 41.86% return to its shareholders.

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