The Dry Bulk Sector has been one of the hardest hit thus far in 2008. It has seen a moderate gain in February, however, still appears undervalued due to the turmoil in the financial sector. The dry bulk sector's one key benefit is the long-term contracts signed years in advance. This is a major benefit for the dry bulk sector because it can minimize fluctuations in the revenue stream for the short termd.
Over the past few weeks DSX along with other dry bulk companies have inked some long term deals for the future. This is significant due to the dramatic difference in future rates compared with rates "as of" today. This provides the ability for significant rate of return each day a contract is signed. Another benefit of the dry bulk sector is the transparency provided by each of the companies. Each day you can view the rates and current shipments via the company's website. Can other companies/sectors say the same thing??
There are plenty of companies worth taking a shot on, especially due to the current state of the financial sector. Goods will need to be shipped (especially commodities, another hot topic) and the only way to get them from point A to point B is via the ocean. Therefore, the shippers can choose whatever they want for future pricing of daily rates. The P/E ratio for the leader in the sector is 7.8!?!?! Thats ridiculous...Look to take advantage of the long calls in jun and sept 08.
