The global, logistical gridlock has worsened over the past few months, exacerbated by the holiday shopping rush last December. Because logistical disruptions are unabated, freight expenditures are projected to continue rising. However, because consumer demand for all types of goods continues to rise, especially with the extended remote life culture, the shipping sector is predicted to grow substantially in the coming years. According to Cowen analyst Jason Seidl, "Right now there's still strong demand out there."
Consumer sentiment is quite strong, with increased spending, owing to convenience of shopping online and improving inflationary conditions. This is creating positive momentum for certain fundamentally strong companies with robust financials. And investors' interest in this space is evidenced by the SonicShares Global Shipping ETF's (BOAT) 8.7% returns over the past three months.
So, it could be wise to add top-rated shipping stocks ZIM Integrated Shipping Services Ltd. (ZIM) and Matson, Inc. (MATX) to one’s portfolio now. They are trading below their 52-week highs but have significant upside potential. Furthermore, these stocks are rated 'A' (Strong Buy) in our POWR Ratings system. They also have an A grade for Momentum.
ZIM Integrated Shipping Services Ltd. (ZIM)
Headquartered in Haifa, Israel, ZIM and its subsidiaries provide container shipping and related services in Israel and internationally. It operates a fleet of 101 vessels with a global network of 69 weekly lines.
On November 17, 2021, Eli Glickman, ZIM's President & CEO, said, "Reflecting ZIM's strong outlook and extremely positive container liner market fundamentals, we have once again raised our full-year 2021 guidance. As an innovative digital leader of seaborne transportation and logistics services, we are well-positioned for the future."
ZIM's income from voyages and related services increased 209.7% year-over-year to $3.14 billion for the third quarter, ended Sept.30, 2021. Its profit came in at $1.46 billion, up 913.1% year-over-year. Also, its EPS was $12.16, up 794.1% year-over-year.
Analysts expect ZIM's revenue to be $10.45 billion in fiscal 2022. Its EPS is expected to grow 4.3% per annum for the next five years. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. It is currently trading 2.4% below its 52-week high of $70.64, which it hit on Feb. 3, 2022, to close Friday's trading session at $68.91. Also, the stock gained 383.6% in price over the past year and is currently trading above its 50-day and 200-day moving averages.
ZIM's POWR Ratings reflect its solid prospects. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The company has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
In addition, it has an A grade for Momentum and a B grade for Growth, Value, and Quality. ZIM is ranked #3 of 45 stocks in the Shipping industry. Click here to see the additional POWR Ratings for ZIM (Stability and Sentiment).
Matson, Inc. (MATX)
Headquartered in Honolulu, Hawaii, MATX and its subsidiaries provide ocean transportation and logistics services. Its segments are: Ocean Transportation and Logistics.
On Nov. 3, 2021, Chairman and CEO Matt Cox said, "The strong economic and business trends we saw in the second quarter continued in the third quarter resulting in a solid performance in both Ocean Transportation and Logistics."
MATX's total operating revenue increased 66.1% year-over-year to $1.07 billion for the third quarter, ended Sept. 30, 2021. Its net income came in at $283.2 million, up 299.4% year-over-year. Also, its EPS was $6.53, up 300.6% year-over-year.
Analysts expect MATX's revenue to come in at $3.55 billion for its fiscal 2022. Its EPS is expected to increase 15% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 42% in price to close Friday's trading session at $89.96. It is currently trading 11.6% below its 52-week high of $101.72, which it hit on Feb.1, 2022. Also, it is currently trading above its 50-day and 200-day moving averages.
MATX's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
MATX has an A grade for Growth and Momentum and a B grade for Value and Quality. It is ranked #2 in the Shipping industry. Click here to see the additional POWR Rating for Stability and Sentiment for MATX.
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ZIM shares were trading at $72.09 per share on Monday afternoon, up $3.18 (+4.61%). Year-to-date, ZIM has gained 22.48%, versus a -5.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Take Advantage of the Momentum in These 2 Top-Rated Shipping Stocks: ZIM Integrated and Matson StockNews.com
