Tuesday, January 3, 2012

Make Money With Dry Bulk Shipping Stocks

The Baltic Exchange's main Sea Freight Index, has recently been on the rise again. The Index in general, gauges the cost of commodities such as iron ore, coal, cement, fertilizer and grains, etc. Ships within the Sea Freight Index, are usually broken down into four different freight capacity sizes, Handysize, Supramax, Panamax and Capesize. With the Handysize having the smallest capacity freight size, and the Capesize having the largest.

Since the start of the economic crisis, the Dry Bulk Shipping Industry has been hard hit on all fronts. With the drop in worldwide demand for dry bulk goods, together with a glut of over-ordered ships from when times were better, the Dry Bulk Shipping Industry has been left out to sea without a paddle. Previous to the crisis, dry bulk freight rates were at all time highs, sharply dropping off when the crisis started, and hitting rock bottom about 12 months ago.

The value of these shipping companies has therefore plummeted to lows of where if their ships were sold for scrap, they would actually command a higher value than their present day stock valuations. Most of these companies stock valuations, are now floating around the 20% mark from where they were before the crisis started. Previous $16.00 dollar stocks can now be picked up for around $3.00 dollars each or less, making them considerably cheap in today's market.

However, now may be the right time to start thinking about investing in these beaten down shipping stocks, as the tide seems to be on the change once again. After several years of sluggish demand for dry bulk goods, demand from countries such as, China, India, Brazil and Vietnam, seems to be on the move once again. Considered future world economic growth leaders, this small group of countries may be just what the Dry Bulk Shipping Industry needs.

As demand for dry bulk goods rises again, the previous glut of unemployed ships will once again find active employment. This will in turn start to drive up dry bulk shipping freight rates, and help these loss making companies become profitable again. Once this happens, many shipping stocks that previously paid out dividends, and were forced to either cut them, or stop paying them out all together, will begin to reinstate them.

These sunken shipping stocks will become buoyant once again, as more and more investors become attracted to them. This in turn, will push up their stock values to near pre-crisis levels, making investing in Dry Shipping Stocks today, an excellent way of riding out the crisis, and shipping in a tidy little profit.

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