For immediate release
Chicago, IL – May 17, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and 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 the highlights from Tuesday’s analyst blog:
3 stocks crushing the S&P so far in 2022
It’s no secret that market conditions have been adverse to investors throughout 2022. Following a once-in-a-lifetime pandemic, we have been thrust into a unique economic environment that has brought the Fed to raise interest rates and become very hawkish in nature. Exciting, high-flying growth stocks that once seemed unstoppable have come to a screeching halt, putting dent in many portfolios.
A great way to limit overall portfolio drawdowns is to find industries that have shown a high level of relative strength against the general market – and that’s where the Zacks Industry Ranking List comes in.
Zacks Transportation-Shipping stocks have been hot year-to-date, returning nearly 30% and easily crushing the 15% decline in the S&P 500. After witnessing countless valuation drops at double digits in many stocks, this industry has done just the opposite and become a much-needed haven for investors’ cash.
Three companies in particular have all navigated the market since the start of the year. The chart below illustrates individual stock performance through 2022 while incorporating the S&P 500 as a benchmark.
As we can see, all three stocks have been strong winners in 2022. What makes these companies even more attractive is that all three have dividend yields above 12%; establishing a source of income during market downturns is a major boost. Additionally, all three companies sport a coveted Zacks Rank #2 (Buy).
Grindrod Shipping Holdings
Grindrod Shipping Holdings is an international shipping company that owns, charters and operates a fleet of dry bulk carriers. Over the past year, stocks have soared 250%.
The company sports a handsome forward earnings multiple of 4.1X, well below June 2021 highs of 12.1X. Additionally, the value represents a staggering 78% discount to the S&P 500’s forward earnings multiple of 18.1X.
Another plus point of the business is that it provides a solid source of income. GRIN’s current dividend yield stands at 12.1%, with a very sustainable payout ratio of 12% of earnings. If the dividend yield was not attractive enough, the payout ratio reflects an ability to pay dividends consistently without issue.
The company is also showing strong growth in free cash flow and operating cash flow, giving it the flexibility to reward investors and consistently reinvest in its operations. From 2020 to 2021, the company’s operating cash flow jumped 191%, and free cash flow jumped 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 shipping solutions in the dry bulk industry. Over the past year, stocks have soared an incredible 78%.
The company is posting a cheap forward earnings multiple of 4.8X, well below 2022 highs of 5.5X. Additionally, the value also reflects a steep 73% discount to the S&P 500.
SBLK also likes to generously reward its investors. The company enjoys an extremely high dividend yield of 26.7% and over the past five years the company has increased its dividend five times. SBLK’s payout ratio sits at 74% of earnings, which is considered slightly unsustainable. However, the company has had no problem consistently increasing its dividend.
The company’s cash flow is also very impressive. From 2020 to 2021, operating cash flow jumped 350%, and at the same time, free cash flow soared 550%. These measures reinforce confidence in SBLK’s ability to maintain its high dividend yield.
SBLK sports a Zacks Rank #2 and a Value Style Score of a B.
Bulk Eagle Shipping
Eagle Bulk Shipping Inc. is a fully integrated owner-operator engaged in global shipping, focusing exclusively on the mid-size dry bulk carrier segment. Over the past year, stocks have provided an exceptional return of 66%.
Similar to SBLK and GRIN, the company is showing strong dividend indicators. Its dividend yield stands at 12.2%, and over the past five years the company has increased its dividend twice. It should be noted that the company recently started its dividend payouts 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 1560%, and free cash flow soared 2540%. Like SBLK with its higher payout ratio, the company’s cash flow metrics inspire 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 suffered throughout 2022, the Zacks Transportation – Shipping Industry continued to sail, rewarding investors handsomely. This reflects how critical it is to find industries that have shown a high level of relative strength. Right now, the high-flying growth and tech names that investors love seem to have a purpose on their backs with rising interest rates.
All three companies have strong valuation metrics, have witnessed positive estimate revisions across the board, post strong cash flow statements, have strong dividend yields and, most importantly, pride themselves on a strong Zacks No. 2 (buy) ranking. Plus, they all boast strong style scores for value. These three stocks would be fantastic places to store cash for investors looking to limit drawdowns in their overall portfolios.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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Eagle Bulk Shipping Inc. (EGLE): Free Inventory Analysis Report
Star Bulk Carriers Corp. (SBLK): Free Stock Analysis Report
Grindrod Shipping Holdings Ltd. (GRIN): Free Stock Analysis Report
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