Drewry Maritime Financial sees dry bulk shares at an attractive price point after suffering a wallop in 2018 that continued into this year.
The investment research service said the stocks suffered from a perfect storm of global headwinds last year.
Analyst Victoria Saraglis says five owners under coverage posted a 24.4% negative return last year, owing to uncertainty in the global markets that caused MSCI world index to fall 10.4%.
They plunged another 13.2% so far this year.
But Saraglis pointed to tonne-mile demand that is expected to increase by 2.6% this year.
"In light of the correction in dry bulk stocks in December 2018 ... led by the sell-off spree on the New York exchanges, the valuation of the stocks seems attractive," wrote Saraglis.
Dry bulk stocks within Drewry's universe are Star Bulk Carriers, Golden Ocean Group, Scorpio Bulkers, Diana Shipping and Norden.
"Fears surrounding a slowdown in the Chinese economy, Brexit in Europe and the most talked about issue—the US-China trade war—were to blame for the downward trend," she wrote today in a client note.
She said Federal Reserve interest rate hikes caused the stock market to collapse in late 2018.
Despite Drewry's positive view of the equity prices in dry bulk, Saraglis said risk "continues to loom large". For example, the International Monetary Fund lowered 2019 global economic growth forecast to 3.5%, fearing "no-deal" Brexit and China slowdown.
Drewry's latest note comes as other analysts are seeing a silver lining on gloomy forecasts for this year and next.
As TradeWinds reported earlier this week, Clarksons Platou Securities chopped its projection for capesize rates in 2020 by 37% to $18,000 per day, in addition to dropping its outlook for the first half of 2019 to $14,000 per day.
But analyst Frode Morkedal said he sees upside potential at the revised forecasts, keeping a "buy" rating on dry stocks.
Today, the firm smiled on the potential dry bulk impact of China's proposal in trade talks to buy an additional $30bn per year in US agricultural products.
"We consider this very good news for the bulk market which has been under significant pressure," Clarksons Platou said.
This article has been amended since publication to reflect that Victoria Saraglis is the analyst who authored the Drewry report.
