Monday, March 13, 2017

Shipping: "Scorpio Bulkers Has Doubled in Just Six Months. This Analyst Just Upgraded It" (SALT)

Just a whiff of clickbait it the headline.
From Barron's Stocks to Watch:
As a stock picker, I always try to be early, rather than late…and I better have a good reason for recommending a stock that has already surged higher or panning a stock that’s already dropped. So I always pay close attention to analyst upgrades that come after large moves in either direction. 
Which brings us to Scorpio Bulkers (SALT). As its name indicates, Scorpio Bulkers ships bulk commodities, like ores, grains and fertilizers. Its shares had surged 117% during the past six months through Friday’s close, as the pickup in the global economy meant more need for its services. I’ll let Credit Suisse analyst Gregory Lewis and team explain why they just upgraded Scorpio to Outperform from Neutral: 
Asset prices continue melt-up with each transaction with the price of a Kamsarmax estimated at $24M up about 10% from the start of the year. Bulker prices are up roughly 30% since bottoming in 1Q16 and with nil modern tonnage available for sale we expect prices to grind higher. We upgrade SALT to Outperform and increase our TP to $10 (from $7). Our NAV-derived target price implies a ~15% increase in dry bulk asset prices. 
One of my mistakes was passing on the dry shippers in favor of Golar LNG (GLNG), which I recommended on Nov. 19 as an alternative....MORE 
I did not know that Barron's Mr. Levisohn considered himself a stock picker.