Three Best & Worst: Dry Bulk Stocks

TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking total return performance. We asked the team to study the dry-bulk shipping sector to discern the three best -- and three worst -- stocks in the sector. Their analysis follows.

THREE BEST:

Diana Shipping(DSX Quote): Return-on-equity of 28.15% versus an industry average of 22.67%, and a P/E ratio of 9.27 versus an industry average of 18.17. Diana also has low debt and a beta value under 2, which is very low for the dry-bulk sector. The stock appears to be undervalued and the company in a strong financial position. It will also be less susceptible to the violent up-and-down swings of its competitors.

Tidewater(TDW Quote): Very low debt and a P/E of only 7.61. Tidewater is also an American company, which means that, unlike many of its Greek competitors, it has a habit of making quality financial information more available to investors. This stock can give exposure to shipping minus international risk but with the same high-gearing of some other options.

Kirby Corporation(KEX Quote): Another American company, Kirby has a modest debt position and has remained profitable through the economic downturn. Priced at a slight discount, Kirby can offer stable exposure to shipping.

THREE WORST:

Excel Maritime Carriers(EXM Quote): After discontinuing its dividend, there isn't much to stick around for. The company has a negative ROE and it's not priced at a discount. With a fairly heavy debt load and a beta value above 3.5, this stock is all risk and no reward.

Eagle Bulk Shipping(EGLE Quote): Eagle stock has dropped 77% in the past year, and analysts are predicting negative growth next year of 54%. Though the company has remained profitable, investors have begun seeking more stable investments elsewhere.