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Stock Strategist Industry Reports

Rough Waters Ahead for the Dry-Bulk Shipping Industry

Dry-bulk ship owners still face short-term uncertainty.

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Dry-bulk shipping stocks remain some of the most volatile names in our coverage universe, as evidenced below by Capital Link's dry-bulk equity index, a composite of 14 U.S.-listed shipping companies. The industry has underperformed the S&P 500 (gaining 52% from March 2009 lows compared with a 64% climb in the broader market), but we don't believe the names we cover are particularly cheap.

Shipping rates rebounded in late 2009 and the beginning of 2010, returning to profitable levels for most dry-bulk ship owners. However, these prices are still heavily reduced from record levels seen in 2008. Many shippers' credit situations have improved markedly since our last dive into the industry, but we continue to believe that structural oversupply will threaten industry participants' profitability as the year progresses.

Adam Fleck does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.