U.S. marine shipping stocks are poised to see their shares climb 59 percent in the next 12 months, outshining the 35 percent gain on the first day of Alibaba Group Holdings Ltd.’s initial public offering last month.
The gain for shippers that ferry crude between U.S. ports and carry liquefied natural gas and dry goods such as coal around the world would be the most of any sub sector in the Russell 3000 Index, according to estimate data compiled by Bloomberg.
The analysis screened for companies with a market value of at least $500 million and 10 analyst ratings.
Marine shipping stands to benefit from a world economy forecast to expand about 3 percent in 2015, the fastest annual pace in five years, the strongest dollar since 2010, and declining oil and commodity costs which boost demand and reduce input costs. At the same time, the pace of vessel construction has slowed, so fewer ships compete for cargoes, creating room to raise freight rates.
“Lower commodity prices are stimulative to the economy and good for seaborne demand,” Nigel Prentis, the head of consultancy at Hartland Shipping Services Ltd. in London, who’s worked in the maritime industry for 33 years, said. “It could be a rather perfect combination of better- than-expected demand and weaker fleet expansion.”
Brent crude has dropped more than 20 percent from this year’s peak in June, meeting a common definition of a bear market, on concern global supply is outpacing demand. The plunge in oil and other commodities prompted Citigroup Inc. to estimate savings to the global economy equivalent to stimulus of $1.1 trillion a year.