Star Bulk Carriers (NASDAQ:SBLK) is in the dumps. After hitting a 52-week high of $12.09 in December, the dry bulk shipper's stock hit a 52-week low of $3.86 on May 13. It has since recovered to close on Monday, June 1 at $5.30 per share. Shipping dry bulk freight like iron ore, coal, and grain has always been a volatile business, but volatility of shipping rates in the past year has been exceptional, leading to high stock price volatility. I believe that unless the coronavirus damage to the economy results in a lengthy global recession, shipping rates will bounce back and so will the stock. The question is timing: how long do investors need to wait to catch that bounce? I will cover some factors that could affect timing, profits, and the stock price. I believe that when the economy improves, a stock price of $10-15 per share becomes likely. As I will explain, under the IMO 2020 pollution control rules, I would have expected the share price to hit $20 in the second half of 2020, absent the pandemic.
SBLK background
Star Bulk Carriers owns 106 ocean vessels used to ship dry bulk cargoes. 38 are Capesize or larger, 44 are Panamax to post-Panamax, and 34 are Ultra or Supermax. It is headquartered in Greece but the stock is listed in the U.S. Its annual shipments have been above 60 million metric tons. The dry bulk shipping industry is highly competitive. I believe Star Bulk has a highly experience management that runs the fleet efficiently and looks out for its stockholders.
Pandemic Impact on Bulk Freight Rates
The dry bulk shipping market tends to operate by classic free market rules. Ships may be chartered for long periods of time or for a single load on the spot market. When there is
