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.
: 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.
: 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.
: 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.
Excel Maritime Carriers
: 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
: 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.
Alexander & Baldwin
: This one has a short ratio of 14, so a lot of investors are betting on a big drop. With a P/E ratio of 34.45, it's easy to see why. Analysts are predicting growth for the quarter of negative 68.5%, and market sentiment seems to be souring on ALEX.
Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level II CFA candidate.