3 Shipping Stocks Navigating Through Global Demand

The global shipping market is propelled by growing demand for international marine freight transport, increased reliance on ships for cargo transportation, and a boost in trade-related agreements.

With these trends in mind, quality shipping stocks Danaos Corporation (DAC), ZIM Integrated Shipping Services Ltd. (ZIM), and Global Ship Lease, Inc. (GSL) present compelling investment opportunities. These companies are well-positioned to capitalize on the growth potential of the shipping industry, making them attractive choices for investors seeking to benefit from this thriving market.

The global shipping market's expansion is fueled by steady demand and significant government investments, particularly in the U.S. maritime sector, spurred by recent actions from the Biden-Harris Administration and U.S. allies. The global container shipping market is expected to grow at a CAGR of 12% between 2020 and 2028, to reach a projected value of $15.87 billion.

Further, cargo shipping, the most cost-effective transport method per ton, is preferred for long-distance, low-environmental-impact transport of bulky goods. The global cargo shipping market is projected to reach $4.2 trillion by 2031, growing at a 7% CAGR from 2022 to 2031.

Considering these conducive trends, let’s examine the Shipping stocks in detail.

Stock #3: Danaos Corporation (DAC)

DAC headquartered in Piraeus, Greece, offers seaborne transportation services through its fleet of containerships and drybulk vessels. Serving major shipping lines, its end users are businesses involved in international trade across Australia, Asia, and Europe.

In July 2024, DAC took delivery of its 10th capsized dry bulk carrier. As a result, aggregate DWT capacity of its capesize drybulk fleet currently stands at approximately 1.8 million DWT.

The company pays an annual dividend of $3.20, which translates to a dividend yield of 3.90% at the prevailing price levels, higher than its four-year average yield of 3.10%. Additionally, the company has raised its dividend payouts at a CAGR of 47.4% over the past three years.

During the fiscal second quarter that ended June 30, 2024, DAC’s operating revenues increased 2% year-over-year to $246.31 million. Its adjusted net income and EPS came in at $132.31 million and $6.78, respectively.

Analysts expect DAC’s revenue for the quarter ended September 30, 2024, to increase to 7.9% year-over-year to $258 million. Meanwhile, the EPS for the same quarter is expected to be $6.78. It surpassed the Street EPS estimates in three of the trailing four quarters.

Over the past year, the stock has gained 29.9% to close the last trading session at $81.96. It soared 10.7% year-to-date.

DAC’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

DAC has a B grade in Value, Momentum, Stability, and Quality. It is ranked #15 out of 34 stocks in the A-rated Shipping industry.

Beyond what we have stated above, we also have given DAC grades for Growth and Sentiment. Get all the DAC’s ratings here.

Stock #2: ZIM Integrated Shipping Services Ltd. (ZIM)

ZIM based in Haifa, Israel, provides container and vehicle shipping services worldwide. With a fleet of 150 vessels and 67 weekly shipping routes, it serves diverse clients, including end-users and freight forwarders. ZIM also offers ZIMonitor, a premium tracking service for reefer cargo.

On September 9, 2024, ZIM announced a new partnership with MSC on the Asia–US East Coast and Gulf routes, launching in February 2025. This collaboration aligns with ZIM's focus on efficiency and sustainability, utilizing larger, LNG-powered vessels to reduce emissions and strengthen its competitive position.

It pays an annual dividend of $3.72, which translates to a dividend yield of 15% at the prevailing price levels.

In the fiscal second quarter that ended June 30, 2024, ZIM posted an income from voyages and related services of $1.93 billion, up 47.6% year over year. Its gross profit was $ 524.2 million, compared to a loss of $79.2 million in the year-ago quarter. Its results from operating activities were $ 468.3 million for the quarter. Moreover, its profit for the period and EPS stood at $ 374.9 million and $3.08, respectively.

Street expects ZIM’s revenue for the quarter ending September 30, 2024, to increase 89.5% year-over-year to $2.41 billion whereas the EPS is expected to be $7.21.

The stock climbed 151% year-to-date and has returned 236.6% over the past year, to close the last trading session at $24.77.

ZIM’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

It has a B for Growth, Momentum, Value, and Quality. It is ranked #13 in the same industry.

To access ZIM’s Sentiment and Stability ratings, click here.

Stock #1: Global Ship Lease, Inc. (GSL)

Headquartered in Athens, Greece, GSL owns and charters 68 mid-sized and smaller containerships with a total capacity of 375,406 TEU. It provides fixed-rate charters to container shipping companies worldwide.

On September 10, 2024, GSL announced a cash dividend of $0.55 per depositary share on its 8.8% Series B Cumulative Redeemable Perpetual Preferred Shares This dividend covers the period from July 1 to September 30, 2024, and will be paid on October 1, 2024.It pays an annual dividend of $1.50, which translates to a dividend yield of 6.1% at the prevailing price levels.

On August 12, 2024, GSL secured a $300 million senior term loan to refinance its existing debt on better terms.

GSL’s total operating revenue increased 8% year-over-year to $175 million in the fiscal 2024 second quarter that ended on June 30, 2024. Its normalised net income came in at $86.66 million, up 17.2% year-over-year, while its normalised class A EPS grew 17.7% from the year-ago value to $2.46.

For the fiscal year ending December 2024, Street expects GSL’s EPS and revenue to rise 9.8% and 3.1% from the previous year to $9.91 and $695.85 million. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.

Shares of GSL have gained 45.2% over the past year and 24% year to date to close the last trading session at $24.58.

GSL’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has an A grade in Value and Quality and a B for Momentum. Within the same industry, it is ranked #4.

Click here to see GSL’s ratings for Growth, Sentiment, and Stability.

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ZIM shares fell $0.07 (-0.28%) in premarket trading Monday. Year-to-date, ZIM has gained 153.68%, versus a 27.04% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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