In many vertical industries, volatility will increase as (and if) oil prices begin to move away from the cyclical lows at which they are currently trading. While some investors may view volatility as potentially dangerous, those who have been in the stock market long enough understand that volatility can make money if the initial idea behind the trade is sound enough.
There are many tailwinds in the oil and rest of the energy sector today. These tailwinds could send oil prices back to levels not seen since 2022. One of the main factors behind the bullish oil outlook is that the US Federal Reserve (Fed) has begun cutting interest rates along with other major central banks around the world.
As a result, lower rates and cheaper money are likely to stimulate the economic cycle, which is always an indicator of increased oil demand. Now, if this thesis is true, and more countries begin to demand more oil, transport supplies (particularly shipping) will be used to deliver the required goods. Here are names like Star Bulk Carriers Corporation NASDAQ: SBLK, LLC “ZIM Integrated” New York Stock Exchange: ZIMand even Tidewater Inc. New York Stock Exchange: TDW join the game.
Why analysts see double-digit growth potential for Star Bulk Carriers shares
Although Star Bulk Carriers does not directly transport crude oil, it does have access to the types of commodities and essential materials that are in high demand when higher oil prices accompany higher oil prices. So, one way or another, success in the energy sector is likely to be linked to the success of Star Bulk Carrier stock.
Star Bulk Carriers inventory forecast today
$23.80
Growth potential 27.10%Moderate purchase
Based on ratings from 4 analysts
| High forecast | $28.00 |
|---|---|
| Average forecast | $23.80 |
| Low forecast | $20.20 |
Star Bulk Carriers Inventory Forecast Details
Knowing this, investors shouldn’t be surprised to see Wall Street analysts raising their estimates for the stock today. Specifically, Jefferies Financial Group reiterated its Buy rating on the stock, this time with a consensus price target of $28 per share.
To prove these new views correct, Star Bulk Carriers shares would need to rise as much as 47.3% from where they are trading today, not to mention hit a new 12-month high for the company. Knowing that fundamental tailwinds are starting to gain momentum right now, other market participants have shown their recognition of this upside potential.
Bearish traders have begun to retreat from their short positions, as investors can tell by the nearly 1% drop in short interest rates in the past month alone. This points to signs of bearish capitulation amid all this potential upside. Moreover, shareholders are offered a payout of $2.8 per share.
On an annualized basis, this translates to a dividend yield of 14.8%, which would outpace any inflationary pressures that may arise from the resumption of the business cycle.
ZIM Integration: High Risk, High Reward Game with Discounted Profit Growth Potential
ZIM’s shipping routes are heavily dependent on the proximity of Israel and, as a result, the several geopolitical conflicts and “wild cards” currently developing in the region. This will put two major factors into the stock: one in favor and one against.
A factor against ZIM Integrated stock is the potential risks that could arise in the region and jeopardize the company’s fleet and routes, which in turn would jeopardize the brand’s future profitability if this were to happen.
The factor in favor of price is related to pricing power, since greater demand on these narrower routes may allow ZIM to charge higher prices in exchange for the risk associated with these routes. All of this is reflected in the stock’s valuation metrics, which can offer investors an entry point.
Starting with the price-to-book (P/B) ratio, where ZIM Integrated stock commands a multiple of 1.3x, investors may notice a significant discount to its peers. The broader transportation sector’s average valuation of 2.2 times today would mean investors can access that higher pricing power for less money.
Tidewater Stock: Direct Energy Transport Play with Triple-Digit Upside Potential
This transportation fleet directly impacts the transportation of these energy commodities, including crude oil and natural gas. These two energy fundamentals for any economy that gets back on track will help boost Tidewater stock’s performance.
Tidewater Reserve Forecast Today
$102.25
Growth potential 95.08%Buy
Based on ratings of 5 analysts
| High forecast | US$130.00 |
|---|---|
| Average forecast | $102.25 |
| Low forecast | $88.00 |
Tidewater Reserve Forecast Details
Wall Street analysts know this as the consensus price target is now set at a lofty $102.25 per share, implying a net upside of as much as 103% from where it trades today. What’s more, some institutions have done their homework and realized this is a stock worth buying today.
As recently as November 2024, State Street justified a 1.9% increase in its Tidewater stock. With this new distribution, the bank’s net position today peaked at $134 million, or 3.6% ownership in the company. Like ZIM Integrated, Tidewater shares trade at a P/B multiple of 2.6x, which is also below the average valuation of the entire transportation sector today.
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Do you expect global energy demand to decline?! If not, then it’s time to take a look at what role energy stocks can play in your portfolio.
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