Shipping rates have been skyrocketing and shipping stocks have been going up massively. So don’t miss out on the rally! These are the 10 best stocks to buy now. These top growth stocks to buy now are not only some of the best growth stocks, but are also some of the best dividend stocks to buy now. These cheap stocks will continue to rally so long as shipping rates continue to rise. These are the best stocks to invest in 2024, but will most likely top out by the end of this year. These high growth stocks are the best stocks to buy now, but these top stocks to buy now are to be used as short term swing trades, and not long term investments.
Ocean container shipping rates have been skyrocketing over the past seven months, and that means shipping stocks have been going up as well. So let me tell you why shipping rates are rising, how high they might go, what the ten best shipping stocks to buy now are, and if you do decide to invest in shipping stocks, I’m also going to show you how to know when to sell those shipping stocks. For those of you who are new to this channel, my name is Stock Curry. I’m a former Merrill Lynch and Morgan Stanley investment banker, and I have over 25 years of trading experience.
A sudden container crunch has sent ocean freight rates soaring, which has set off global trade alarm bells. The beginning of peak shipping season, coupled with the longer transit times to avoid the Red Sea, and bad weather in Asia, have hit the flow of trade on key routes. Ocean carriers are skipping ports or decreasing their time at ports and not picking up empty containers. In an effort to keep vessels on track for delivery, it is likely spot rates will surpass the level seen at the height of the Red Sea crisis earlier this year. While the cost to operate a container fleet have increased, the surge in freight rates has not served just to cover rising expenses. Container ship operators have been reporting record high operating profit margins.
And with rising profit margins comes rising stock prices, which is why now is a great time to invest in shipping stocks. Even though a lot of them have already run up, I do believe they have more room to run. Now in a minute, I’m going to give you the ten best shipping stocks to buy. First, I wanted to let you know that if you’re looking for more general market data each week, you want to know what’s going on in the market each week, I have a free newsletter that I put out every single Sunday night. If you want to get that free newsletter, which covers the technical analysis on the market, as well as market sentiment, the upcoming earnings for the week, and the upcoming economic news that’s going to move the markets, you can get that free newsletter here.
So let’s talk about what is behind the sudden and dramatic increases in ocean freight container shipping rates. Demand reached record levels in Q1 2024, up by 9.2% compared to Q1 2023, and comes at a time when the Red Sea situation is putting increased pressure on shipping capacity. But significantly, this is all taking place while the chaos of port congestion and lack of available capacity during the Covid 19 pandemic is still fresh in the memory of shippers. It’s economics 101. Higher demand equals higher prices. Many US shippers used 2023 to bring down inventory levels from the pandemic highs, which means there is likely space in new built warehouses to front load imports. The risk of having too high inventories is more palatable than the risk of having goods arrive too late.
Also, the shadow of black swan events looms large over the industry as well as the Red Sea crisis. There are still ongoing restrictions in the Panama Canal and signs of escalation in the US China trade war. Who can be confident in saying there is not going to be another black swan event in 2024? And all of this has shipping rates increasing towards levels we have not seen since the Covid 19 pandemic. And it’s very possible shipping rates are going to exceed the highs from 2022.
Fears are rising that ocean freight rates may surpass $20,000, with no relief for global trade into 2025. A lack of containers and limited vessel capacity overseas has forced shippers to move to the spot market to find equipment to load out at origin. That is significantly driving rates to levels not seen since the post Covid crisis two years ago. Freight is also bottlenecked at port terminals due to an extended dwell times, and empty containers to load with goods are very scarce. It is unlikely that the situation will resolve itself soon, and ocean freight rate levels might not ease up before the Chinese New Year. The Chinese New Year takes place on January 29th, 2025.
This is very important for you to understand. If you do decide to invest in these shipping companies right now, these need to be a short term swing trade, not a long term hold. We had talked about some of these shipping companies in 2021. Many of them ran up like crazy, but then people didn’t sell them. They just held them and a lot of times they lost money. So if you’re going to buy shipping stocks right now, make sure to sell them and take profits before January, because very likely these high shipping rates that we’re seeing right now are going to be temporary, and at some point they will come back down. And when the shipping rates come back down, the stock prices are going to fall as well. So these trades need to be short term trades, not long term holds. So if you do decide to invest make sure you offload these and take profits prior to January.
Now with that said let’s get into the 10 best shipping stocks to buy. The first one is going to be MATX. This is Matson, and it’s the largest major exchange shipping company available in the United States. MATX has a valuation grade of a C, mainly due to their sales price being a little bit low, but their forward PE ratio is 13.28, giving this a B+. It’s not the best shipping company to invest in, but it is the largest. And for a lot of investors who like to focus on those large cap companies for safety, that might be a good stock to consider.
The next stock is SFL. This is SFL Corporation. Now, what’s interesting is that the Seeking Alpha valuation grade is an A-, even though the forward PE ratio and others are around a D or a C. The reason this has such a high valuation grade is the dividend. The dividend yield on this stock is 9.2%. It is the highest dividend of all of the stocks that we’re going to talk about today. So if you’re looking for dividends, SFL is a stock you might want to consider.
Now that said, it’s very important to understand that with these shipping companies, the dividends are seasonal. Dividends will go up as these companies are profitable, and dividends will go down or even disappear altogether if the companies are unprofitable. And we saw that with this next stock that we’re going to talk about.
The next stock is ZIM, Zim Integrated Shipping. And this is a stock that I’ve talked about a lot on this channel. We bought a lot of shares of this stock between $10, $11, all the way up to about $17 a share. And when I had this stock in the Millionaire Club Portfolio, our average buy in price was $17. If you were still holding it, you’d be up about 40% right now. And the thing about ZIM is, they actually got rid of their dividend for a time. But I told you that January was probably going to be the bottom, it would start going up from there, and that is exactly what we saw happen. And we do expect that dividend to come back as well, as the stock becomes more and more profitable. The Seeking Alpha valuation grade on ZIM is a C+. The forward PE ratio is extremely low. The reason it has that C valuation is because they got rid of their dividend. But once they bring that dividend back, I would expect that this valuation grade would go back up. And at one point the dividend exceeded 50% of the stock value. It was a massive, massive dividend. So a little bit riskier here. But this is a stock I would definitely consider a buy.
The next stock is one of the best stocks on this list. And that is DAC. And I’m gonna butcher a lot of these names, I apologize, but I think it’s Danaos Corporation. DAC is the first stock on this list with an A+ valuation grade. Look at these PE ratios: 3.05, with a forward PE ratio of 3.10. Absolutely impressive valuation. I don’t think there’s a more undervalued shipping company in this entire sector. DAC is a strong buy in my humble opinion.
The next stock on this list is not available on the main markets here in the United States. It is a foreign company, but it is available on the OTC market, or penny stock market. And even though it’s a penny stock, or OTC stock, it’s a great company, a very large company that you should really consider. And that is ticker AMKBY. This is A.P. Moller-Maersk, one of the largest shipping companies in the world. AMKBY gets a valuation grade of an A on Seeking Alpha. And it’s not just the low PE ratio that helps bring this grade up. This stock pays a massive 7.4% dividend yield. For those reasons, even though this is a penny stock, I would rate this a buy.
The next stock is CMRE, Costamere. Again, if I butchered that name, I apologize. Despite the massive rally in the stock over the past few months, it still gets a valuation grade of an A on Seeking Alpha, with a very low PE ratio of 6.26, and a lower forward PE ratio of 4.6.
The next stock is another stock that I’ve talked about on this channel before. It is another stock that was a good trade in 2021, and it’s another stock that’s a great trade now. And that is GOGL, Golden Ocean Group. GOGL gets an A valuation on Seeking Alpha with a forward PE ratio of 8.16. This also has a nice dividend of 5.8%.
The next stock is GNK, Genco Shipping and Trading. This stock gets a B valuation. And even though the PE ratio is quite high, it’s all because this company has completely turned itself around, giving it now a forward PE ratio of 9.89. This stock also has a nice dividend yield of 5.3%.
And the last stock is another stock that I’ve talked about before on this channel. And that is SBLK, Star Bulk Carriers. SBLL gets an A+ valuation grade from Seeking Alpha, with a low forward PE ratio of 6.2, and a very high dividend yield of 7.5%. It doesn’t get much better than this. And that is why SBLK is a strong buy in my mind.
So those are the ten best shipping stocks to buy now. Again, these are short term trades. Make sure you sell them before January, because just like these stocks all fell in 2022, they are more than likely going to fall again in 2025.
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