After Months of Stormy Seas, Dry Bulk Shippers Find Optimism

• By the tickerspy.com Staff
• On 9:21 am EDT, Tuesday October 13, 2009

An upgraded powere DryShips (NASDAQ: DRYS - News) this morning, and investors eyed weather forecasts as fall harvest approaches.

Athens, Greece-based DryShips traded higher in the premarket Tuesday morning after receiving an upgrade to "Buy" from "Hold" at Lazard Capital Markets. The analyst said the company's drillship contracts would help it over the next two quarters, according to Reuters. The company also announced that it reached waver terms for $183 million in debt, leaving it with just $187.5 million outstanding. DryShips CEO George Economou said the company is in "constructive discussions with the banks" and he expects to "have those concluded shortly." Investors like the news, sending shares up by 7% ahead of the bell.

Meanwhile, other components of the Dry Bulk Shipping Stocks Index are set to benefit from what could be a record agricultural harvest in 2009.

Michael McDonough at RealMoney.com thinks that a strong harvest this fall could help boost demand for smaller dry-bulk vessels. According to Bloomberg, rains and below-freezing temperatures could weigh on mid-western crops. Investors will be keeping an eye on weather forecasts for their impact on commodity prices and their potential to limit dry bulk demand.

Most of the dry bulk sector is positive over the last week, but many stocks are still recovering from big declines earlier in the last month. OceanFreight (NASDAQ: OCNF - News), Euroseas (NASDAQ: ESEA - News), and the largest U.S.-listed dry shipper Kirby (NYSE: KEX - News) all remain negative over the last month, despite rebounding slightly in the past week.

Meanwhile, Torm AS Steamship (NASDAQ: TRMD - News), Paragon Shipping (NASDAQ: PRGN - News), and Diana Shipping (NYSE: DSX - News) have climbed out of the red with five-day gains of 4% or more.

As of this writing, the Dry Bulk Shipping Stocks Index is one of the 15 worst-performing tickerspy Indexes over the last month, down by -3%. After months of negativity, some analysts and insiders are turning bullish on the sector, and if their calls are accurate there could be more upside for the group.

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