DryShips Inc. (NASDAQ: DRYS) has been all over the major financial outlets as of late, and for good reason. It all started with a Seeking Alpha article that uncovered death-spiral financing at the company. From there, we've seen several negative reports about the company, and the stock has been all over the place. However, is there a strong bullish case for DRYS? Today, we'll talk about a couple of things the company has going for it and whether or not they outweigh the negatives here...
There Are 2 Clear Positives With Regard To DRYS At The Moment
While we've seen quite a bit by way of negative reporting on DryShips, there are two bits of positive news that could help to give the stock a boost. They include:
- Baltic Dry Index – First and foremost, the Baltic Dry Index is key to watch when gauging the potential of any stock in the shipping sector. After all, this index tracks demand in the sector, and the more demand there is, the better the sector as a whole will perform. Well, the Baltic Dry Index is headed up, and as it does, there will be more opportunities for DRYS and others in the shipping sector to grab revenue.
- China – Another factor here is China's demand for coal. You see, the country is currently rejecting coal from North Korea. On top of that, Australian coal supply has reduced quite a bit as of late, following a cyclone. Considering this, China ordering more coal from the United States, increasing shipping rates in the process. This is also a positive for DRYS.
Do The Positives Outweigh The Negatives?
At the end of the day, it's up to you to decide what type of risk you want to take on. While there are a couple of positives here, there are also some negatives. In particular, those that were pointed out with regard to the horrible financing that we've seen from the company. Also, the relationship between DryShips and Kalani Investments is a concern to many, to say the least. So, do the positives outweigh the negatives? For me, the answer is no. The truth is that the positives are shipping sector-wide while the negatives are specific to DRYS. That tells me to look into other opportunities. Nonetheless, anything could happen in the market and DryShips could fly. However, if you plan on investing in the company, make sure to do your research and gauge the risks involved.
What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on DRYS. In particular, we're interested in following the company through the dilution to see if anything positive comes out on the other side. Nonetheless, we'll continue to follow the news closely and bring the story to you as it breaks!
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