Shipping Stocks Offer Big Profit Potential
The Dynamic Wealth Report
May 28, 2008
Profit From The Shipping Industry Before It's Too Late
“I just bought a boat,”
my friend Eli announced a while ago. As an
investment banker I was used to people spending their huge bonuses on
extravagant things. First class vacations, Patek Philippe watches, new
Porsches and Mercedes, new homes, second homes, and of course boats.
What surprised me was the state this boat was in . . . .
A few days later Eli got a call from the harbor master. His boat was
sinking . . . literally. Eli comes from a boating family. He enjoys
spending his free time building and fixing up older boats. Clearly this
boat needs his help.
Fixing a boat isn’t cheap. It never is. I’m sure Eli will be spending a
good deal of time . . . and money on his new boat.
Personally, I prefer buying boats that make me money. I should be more
precise. I prefer to invest in companies that operate boats and make
lots of money. The opportunity in the shipping industry is limitless
right now. Demand’s increasing, profits are at record levels, and the
ways to invest are multiplying.
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All about shipping.
The shipping industry is a little known but very important piece of the
global economy. Shipping is critical. How do you think all of those
products from China make their way to American stores?
Picture a really big boat. If you’re like most people the vision of a
supertanker comes to mind. A really big boat hauling huge amounts of oil
across the oceans.
But supertankers are only one component of the shipping industry.
Obviously, other cargo besides oil needs to be transported. This is
referred to as dry bulk shipping. Steel, iron ore, and agricultural
commodities like corn and wheat. Even finished products like
televisions, computers, and DVD players get shipped.
If you think about it, almost everything we buy has spent some time on a
boat.
In London there’s an organization called The Baltic Exchange. They track
the pricing of shipping rates. The rates to ship goods around the globe
have been going up and up recently. Last week it peaked at a new all
time high.
Now to the point.
These boats aren’t cheap. Back in February, Diana Shipping (DSX) signed
a long term contract with a customer. The term was 23 to 25 months. The
cost was a steal at only $60,500 per day. And that’s significantly
discounted from the spot rates!
Personally, I think spot prices are going to keep increasing for some
time. Think about it. Diana Shipping announced the signing of a lease
for a boat they haven’t even built yet. Their customer committed to a 4
year lease. And the boat’s not expected to touch the water until late
2009 or early 2010.
Unbelievable.
If customers are willing to sign long term contracts it tells me one
thing. They’re expecting shipping rates to increase. Otherwise, why lock
yourself into a fixed price if you think rates will fall. This tells me
customers are anticipating shipping rates to continue increasing.
High shipping rates mean strong profits in the industry.
Just a few days ago Diana Shipping (DSX) announced their first quarter
results. They were nothing short of spectacular. Excel Maritime Carriers
(EXM) posted their results . . . record revenues. Genco Shipping (GNK)
announced record net income and increased their dividend. Eagle Bulk
Shipping (EGLE) announced great quarterly numbers.
Shipping companies are hot right now and look to be for some time.
Obviously when stocks are moving like this there is going to be a lot of
volatility. But as we all know, volatility usually means there’s money
to be made.
As an example, our last 2 trades on Excel Maritime and Diana Shipping in
our new Elite Option Trader service returned 360% and 757% respectively. For more information on how to take advantage of the momentum in certain
industries like shipping,
click here.
• Crude Oil ($133 per barrel)
Oil prices peaked over the last few days at $133 per barrel. Washington
is investigating the role of speculators. Industry analysts are pointing
to demand from China and India as a major driving force. OPEC is
laughing all the way to the bank. And all I can wonder is when this is
going to ignite a firestorm of inflation.
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