wearmanyhats

Yesterday I wrote about excellent buys in the shipping industry.  Today I’m following up with stocks to avoid.  Now, one might ask why bother with the ones to avoid?   Well, perhaps you have a way of screening stocks and some of these come up.  Maybe you even like some of them.  No problem.  Here is just another point of view about them.  Also, I encourage you to be sure to read the last paragraph for some ideas about our current market. 

Star Bulk Carriers (SBLK) is not a star pupil destined for fast track upward. I liked its dividend until I saw the P/E was over 48.  Run, don’t walk away from this one.

 US Shipping Partners (USS) may very well be one of those companies that you should buy, throw into a drawer and give to your grandchildren.  For right now, this liquid bulk hauler is runniing in the red, irregardless of how much dividend they give.  There are enough excellent other stocks out there to grab.  So unless you are interested in a longshot, I would head the other way.

Paragon Shipping (PRGN) startled me with its new found money.  Its increase in revenue is spectacular.  However, it leases out most of the management of their equipment, and has a P/E over 21, which is not a bargain.  Although the dividend is solid and the price seems low, I would pass on this one for some later time.

Ship Finance, Ltd (SFL)  is one that I used to own a few years ago.  It did well for me then, but I’m glad I took the profits and ran.  Currently the price is near its all time low, and the P/E has been adjusted to reflect its declining revenue.  It leases its ships to Frontline - remember them?  With all of the excellent stocks out there, don’t shed a tear to let this one wander off.

Years ago Knightsbridge Tanker (VLCCF) fell to an ungodly low number such as $8 and I didn’t buy them.  Why were they so low?  Simple, they had a lease agreement that needed to be renewed and it was anyone’s guess how the shareholders were going to vote on this issue.  I vowed if they ever got low again to pick them up.  Today I am breaking my vow.  It’s about time for that lease to get voted on again, and my confidence in the direction of the stock is limited.  I believe the parties involved will probably get it all together, but with these factors on the shaky side, I would flee to the more concrete investments in this transport category. 

 The stocks I recommended yesterday are all high dividend yielding stocks designed to give spectacular returns even while they correct.  Those returns make them desireable during market downturns, but this doesn’t mean they will never drop in value during a bear market.  Still, if you throw them into an account and leave them there, at least your money market account will continue to accrue funds.

Do you remember how on October 1st I said to sell some of your gold so that you could releverage?  I believed at that time that gold and slver would take a severe but temporary downturn.  Since then it has dropped over $100/ounce for gold.   Hold that cash!  Get ready to rebuy.  Don’t take ‘no’ for an answer when it comes to finding silver, either.  I hear that it is getting more difficult to find.  But shop around, be persistant when it comes time.  The time is not yet.  Be patient.  It is coming.

 Also, please remember that the bear market, the market downturn is NOT over.  It may be near a bottom, but it may not be.  If you buy now, be prepared to be brave if initially it loses money.  That is the hardest part of contrarian investing.

More tomorrow!

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