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DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), Eagle Bulk Shipping Inc. (EGLE): 3 Shipping Stocks Set to Sail in the Right Direction

DSX Operating Margin TTM Chart

DSX Operating Margin TTM data by YCharts

The current demand for shipping is being hurt by the slowing economies of China and India. With that in mind, Diana Shipping Inc. (NYSE:DSX) is focused on keeping costs low and exploring low-cost investments, such as acquiring new vessels. By adding to its fleet during an inexpensive time, Diana Shipping Inc. (NYSE:DSX) hopes to reward investors with extremely lucrative cash flows once the shipping business picks back up.

Shape up or ship out
The two companies above have done a relatively great job at staying proactive during a troubled time, and Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is doing its best to follow suit. After putting up very strong earnings last quarter, reporting $72.2 million net revenue, compared with $52.6 million for the same quarter last year, Eagle Bulk Shipping Inc. (NASDAQ:EGLE) looks to be on the right track.

Investors should also be aware of a drastic drop in Eagle Bulk Shipping Inc. (NASDAQ:EGLE)’s deferred revenues, which accompanied the increase in revenues last quarter as well. Deferred revenue is an indicator of how much work a company has to fulfill, and increasing numbers are usually healthy. The large drop in deferred revenue could indicate possible changes to revenue recognition and is a warning sign to keep an eye on.

Going up?
All of these stocks are at very low prices despite the fact that the market is at an all-time high. This is because the bulk shipping industry is seeing supply and demand factors that are severely out of order, which the industry is looking to correct in the near future. The Baltic Dry Index, a major indicator of the shipping industry, is currently just under 1,100, down from a high of 11,800 in May 2008. If demand follows current trends and picks up, these stocks could have a lot of room to run.

The article 3 Shipping Stocks Set to Sail in the Right Direction originally appeared on Fool.com.

Fool contributor John Del Vecchio, CFA is the index provider to the Forensic Accounting ETF (FLAG) and co-manager of the Ranger Equity Bear ETF (HDGE). He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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