In 2010, we saw the same thing happen; OceanFreight Inc. (Formerly OCNF on the Nasdaq), a dry-bulk shipper out of Greece, got hit with the Nasdaq letter notifying them to lift their share price above $1 for 10 consecutive days or pack your shit. OCNF, then trading at under 60 cents did what it had to do to comply and the share price eventually climbed back over $1. In June of 2011, DryShips (Nasdaq: DRYS) bought them out for $19.85 a share so, do the math.
Well, Star Bulk Carriers Corp. (Nasdaq: SBLK) got that same letter last Friday and, coincidentally, are in the same industry as OCNF was: Dry Bulk Shipping. SBLK should be in the radar screen and ready to pounce on after they report their Q1 earnings on May 31st.
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SBLK Stock Chart:
Market Cap: 69.51M
Enterprise Value: 320.98M
Price/Sales (ttm): 0.65
Price/Book (mrq): 0.16
(May 13, 2011): 2.42
(May 9, 2012): 0.85
50-Day Moving Average: 0.922
200-Day Moving Average: 1.152
Avg Vol (3 month): 445,518
Avg Vol (10 day): 153,138
Shares Outstanding: 80.36M
% Held by Insiders: 13.65%
It’s no secret that dry-bulk shipping took a huge hit after China slowed down its hoarding of materials used for its expansion. From their filings via the SEC verbatim: Global financial markets and economic conditions have been, and continue to be, volatile. There has been a general decline in the willingness by banks and other financial institutions to extend credit, particularly in the shipping industry, due to the historically volatile asset values of vessels. As the shipping industry is highly dependent on the availability of credit to finance and expand operations, it has been negatively affected by this decline.
Hence, why you’re an idiot if you don’t buy this stock.
About the SBLK Stock Price getting back to $1
The Company plans to avoid any reverse-splits on their common stock and most recently cancelled and withdrew 725,957 shares from its outstanding share capital that it had repurchased up to April 30th 2012. Star Bulk intends to continue acquiring its common shares in the open market at prices and amounts in its sole discretion.
Again, why you’re an idiot if you don’t buy this stock.
Star Bulk Carriers Corp. is a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. The Company’s vessels transport major bulks, which include iron ore, coal and grain and minor bulks such as bauxite, fertilizers and steel products. Star Bulk was incorporated in the Marshall Islands in December, 2006 and maintains executive offices in Athens, Greece.
Currently, The Company’s fleet consists of 14 dry bulk carriers, consisting of 6 Capesize vessels and 8 Supramax vessels and a combined cargo carrying capacity of 1.475 million deadweight tons and an average age of approximately 10 years.
To view the Financials filed by SBLK on the SEC website, click here.
Bottom Line: You’re an idiot if this penny stock is not on your list to watch between now and May 31st. Poor earnings will send the share price even lower which means more profits when it regains Nasdaq compliance of $1 for 10 consecutive trading days. Analysts are looking for 22.35M in Revenues with 20.90M as a low expectation and 24.60M as a high end.
The verbatim and idiot references are simply because; (a) growth in this industry is going to occur through cannibalization, i.e.; DRYS buys OCNF for $19.85 a share, or (b) at the current stock price, SBLK has a 15% built in gain for when the stock returns to $1. There is no-risk of a reverse split since the company has already been spending its cash to buy back stock in the open market.