For Immediate Release
Chicago, IL – May 17, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Grindrod Shipping Holdings GRIN, Star Bulk Carriers SBLK, and Eagle Bulk Shipping Inc. EGLE.
Here are highlights from Tuesday’s Analyst Blog:
3 Stocks Crushing the S&P Thus Far in 2022
It’s no secret that the market conditions have been unfavorable for investors throughout 2022. Following a once-in-a-lifetime pandemic, we’ve been thrust into a unique economic environment that has caused the Fed to raise interest rates and become very hawkish in nature. The exciting and high-flying growth stocks that once seemed unstoppable have come to a screeching halt, putting dents in many portfolios.
A great way to limit overall portfolio drawdowns is to find industries that have displayed a high level of relative strength compared to the general market – and that is where the Zacks Industry Rank List comes in for the assist.
Stocks in the Zacks Transportation – Shipping Industry have been hot year-to-date, tallying nearly a 30% return and easily crushing the S&P 500’s decline of 15%. Upon witnessing countless valuation slashes in the double-digits in many stocks, this industry has done quite the opposite and has become a much-needed safe haven for investors’ cash.
Three companies in particular have all been cruising along in the market year-to-date. The chart below illustrates the stocks’ individual performances throughout 2022 while blending in the S&P 500 for a benchmark.
As we can see, all three stocks have been significant winners in 2022. What makes these companies even more attractive is that all three carry dividend yields higher than 12%; establishing a source of income during market drawdowns is a major boost. Additionally, all three companies are sporting a coveted Zacks Rank #2 (Buy).
Grindrod Shipping Holdings
Grindrod Shipping Holdings is an international shipping company that owns, charters in, and operates a fleet of dry bulk carriers. Over the past year, shares have soared a jaw-dropping 250%.
The company sports a beautiful 4.1X forward earnings multiple, well below June 2021 highs of 12.1X. Additionally, the value represents a staggering 78% discount relative to the S&P 500’s forward earnings multiple of 18.1X.
Another bright spot of the company is that it provides a solid revenue stream. GRIN’s current dividend yield sits at a beautiful 12.1%, with a very sustainable payout ratio of 12% of earnings. If the dividend yield wasn’t attractive enough, the payout ratio reflects an ability to pay out its dividends consistently with no issue.
The company also sports strong free cash flow and operating cash flow growth, providing it the flexibility needed to reward investors and consistently reinvest in its operations. From 2020 to 2021, the company’s operating cash flow surged by a remarkable 191%, and free cash flow surged by 190%.
GRIN is a Zacks Rank #2 (Buy) and sports a Value Style Score of an A.
Star Bulk Carriers Corp.
Star Bulk Carriers is a global shipping company that provides worldwide seaborne transportation solutions in the dry bulk sector. Over the last year, shares have soared an incredible 78%.
The company boasts a cheap 4.8X forward earnings multiple, well below 2022 highs of 5.5X. Furthermore, the value also reflects a steep 73% discount relative to the S&P 500.
SBLK also enjoys rewarding its investors handsomely. The company boasts an extremely high dividend yield of 26.7%, and over the last five years, the company has increased its dividend five times. SBLK’s payout ratio sits at 74% of earnings, which is considered to be slightly unsustainable. However, the company has had no issue with consistently increasing its dividend.
The company’s cash flow is very impressive as well. From 2020 to 2021, operating cash flow surged by an immense 350%, and in the same timeframe, free cash flow skyrocketed 550%. These metrics bolster confidence in SBLK’s ability to uphold its high dividend yield.
SBLK sports a Zacks Rank #2 and a Value Style Score of a B.
Eagle Bulk Shipping
Eagle Bulk Shipping Inc. is a fully integrated shipowner-operator engaged in global transportation, focusing exclusively on the mid-size dry bulk vessel segment. Over the last year, shares have provided a stellar 66% return.
Similar to SBLK and GRIN, the company sports strong dividend metrics. Its dividend yield sits at a notable 12.2%, and over the last five years, the company has increased its dividend twice. It’s worth noting that the company recently started its dividend payments in 2021. Additionally, the company’s payout ratio sits at 63% of earnings.
EGLE’s cash flow statement is quite remarkable. From 2020 to 2021, the company’s operating cash flow exploded by 1560%, and free cash flow skyrocketed by 2540%. Like SBLK with its higher payout ratio, the company’s cash flow metrics instill confidence in its ability to reward shareholders and reinvest in its business.
EGLE is a Zacks Rank #2 (Buy) with a Value Style Score of an A.
While the rest of the market has suffered throughout 2022, the Zacks Transportation – Shipping Industry has continued to cruise along, rewarding investors handsomely. It reflects just how critical it is to find industries that have displayed a high level of relative strength. Right now, the high-flying growth and technology names that investors have come to love seemingly have a target on their back with rising interest rates.
All three companies have sound valuation metrics, have witnessed positive estimate revisions across the board, boast strong cash flow statements, have strong dividend yields, and most importantly, boast a strong Zacks Rank #2 (Buy). Additionally, they all sport strong Style Scores for Value. These three stocks would be fantastic areas to park cash for investors looking to limit drawdowns in their overall portfolios.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Eagle Bulk Shipping Inc. (EGLE) : Free Stock Analysis Report
Star Bulk Carriers Corp. (SBLK) : Free Stock Analysis Report
Grindrod Shipping Holdings Ltd. (GRIN) : Free Stock Analysis Report
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