The shipping sector has been an incredibly interesting one to watch over the past few trading sessions with stocks like TOPS, SHIP, DRYS, and DCIX all making runs for the top. In fact, this morning we received alerts from our partners at Trade Ideas surrounding each one of these stocks and their dramatic gains in the pre-market. So, it’s no wonder why we’re seeing so much interest among investors and traders alike in the shipping sector. Nonetheless, is now the time to invest? Today, we’ll talk about what we’re seeing from some of the hottest tickers in the sector, one of the big problems that many of them face, and whether or not now is the time to consider getting into the shipping sector.
What We’re Seeing From TOPS, SHIP, DRYS, and DCIX
As mentioned above, the shipping sector as a whole is flying at the moment, with some significant gains in the pre-market this morning. At the moment (8:58), Top Ships, Dry Ships, Seanergy Maritime, and Diana Containerships are all trading with pretty impressive gains. TOPS is trading at $2.84 per share after a gain of $1.16 per share (69.05%), while DRYS, SHIP, and DCIX are trading at $4.74 per share after a gain of $0.25 per share (5.57%), $1.65 per share after a gain of $0.48 per share (41.03%) and $23.53 per share after a gain of $3.33 per share (16.49%) thus far today.
Digging Into The Shipping Sector
With pre-market gains like that, many are going to want to jump into the shipping sector. However, is now the time to get involved? The reality is that the shipping sector has struggled for several years. On just about all fronts of the shipping sector, investors have been realizing losses. As demand growth started to slow after large investments in infrastructure among shipping companies in the early- to mid-2000s, the industry started to slide. Unfortunately, that wasn’t the end of the blues for the shipping sector. Shortly after the slide began, a sliding commodity market started to take hold, leading to further declines among shipping stocks.
Nonetheless, many investors are starting to suggest that we’re going to see a reversal in the shipping sector. The reality is that demand in the sector is up, leading to increases in shipping costs and offering more profits to the companies involved. Some say this, combined with incredibly low share prices as a result of the pain felt over the past several years, is creating a compelling opportunity in the market.
A Warning To Those Who Wish To Get Involved
There’s no doubt that the shipping sector is an interesting one, and there could be some massive opportunities found within it. However, there is one thing that I urge all investors to do before they get involved, and that’s to dig deep into the financial data surrounding these companies.
The reality is that the tepid growth experienced in the shipping sector over the past several years has led many of the companies within the sector to take part in horrible financing. A perfect example is DCIX and their relationship with Kalani Investments. Sure, gains on the stock are great now. However, as I pointed out in this article, Kalani is likely to start dumping shares relatively soon, and considering their massive holdings, this could lead to pain in the pockets of retail investors!
Recently we watched as this type of financing dragged DRYS down more than 99%, and many – including TOPS, DCIX, and SHIP – all play in the same park with the same source of financing. Unfortunately, this can quickly get dangerous. So, if you’re going to get involved, pay very close attention to warrants, when and by who they will be exercised, and what that will do the the price of the stock should it take place. Don’t get married to any position and be ready to be fluid at any given time.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
There’s no doubt that the shipping sector is presenting opportunities at the moment. TOPS, DRYS, SHIP, and DCIX are all seeing incredible gains at the moment, and there are plenty of people benefiting. However, it’s important to keep in mind that the sector is riddled with horrible deals that could turn to bite the retail investor where he sits. Nonetheless, doing your research and being willing to be fluid in the process of shipping sector investments could prove to pay out big time in the long run!
Never Miss The News Again
Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!