"Shipping" the laggards

As investors, we tend to be led by the market and we try to follow everything that moves and not touch anything that doesn't. Well lets look at something has been lagging behind all the other movers.

Of course, the hottest stocks in the market have been the financials and commodity related plays. Amazingly, the banking stocks in Singapore are getting close to their previous highs, especially UOB (my personal fave). Noble has hit a new all time high. So is there any more upside for these stocks? I think its hard to bet against it. But what about the next leg? One interesting sector which I have been looking at is the shipping sector. Did a global screening of stocks over the weekend, filtering and scything out the stocks that are still very close to their 52 week lows. Interestingly, majority of stocks that are close to their 52 week lows are shipping stocks.

It makes me think about the possibility of shipping being the next big mover as laggards start to play catch up. I understand that there are many reports stating that global shipping capacity is rising and spare capacity is going to hit the baltic dry index going forward. However, this is old news. From my experience, the prices of shipping companies have been hit for some time, the downside is limited. Many shippers are still trading at 5 times P/E or less. The only worry is the gearing levels. Many of the shippers ordered new ships during the global boom and are not suffering from financing woes. Take NOL for example, raising money through rights and loans. But now, its financing woes have subsided, I believe its once again time to look at the shippers. NOL is a natural choice for Singapore stock lovers. I believe it will come back with a vengeance. Look at the Baltic dry index, it has risen for 11 straight sessions, breaking out of a neckline, looks like the trend is going to be strong.

So do pay attention to shipping, there seems to be value there.

Personally, I like STX and NOL. ONAV for oil tanking shippers.

Well lets hope we can make a ship load of money here.

Best,

SVI