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A cargo ship is seen anchored on English Bay in Vancouver, B.C., as pictured from Lighthouse Park in West Vancouver on Monday April 30, 2012. (DARRYL DYCK For The Globe and Mail)

A cargo ship is seen anchored on English Bay in Vancouver, B.C., as pictured from Lighthouse Park in West Vancouver on Monday April 30, 2012.

(DARRYL DYCK For The Globe and Mail)

SCHIZAS’ MAILBAG

Don’t come aboard Diana Shipping just yet Add to ...

Hi Lou,

Would it be possible for you to take a look at Diana Shipping? Is this a good time to buy or is it too soon for shipping stocks to recover?

Thanks,

Bruce

Hey Bruce,

Thanks for the assignment.

Diana Shipping Inc. operates a fleet of twenty nine dry bulk carriers that move iron ore, coal, and grains around the world on medium- and long-term charters. The company has beaten the street in the last four quarters but earnings have been in a steady decline when you look at the year-on-year comparable over the last two years. The next scheduled release for the company is November 20 when they report third-quarter 2012 results.

More Related to this Story

The shipping of dry bulk cargo is very much dependent on the health of the Chinese economy. As China goes so goes the prospects for shipowners. Chinese gross domestic product growth hit a high of 11.9 per cent in 2010 but has been in a steady decline to the current 7.4 per cent in third quarter 2012. The average rate of growth over the period 1989 to 2012 is 9.25 per cent. Clearly if investors are interested in the shares of shipping companies they will want to watch this indicator.

A review of the charts will provide another element to your consideration of timing for your purchase of the shares of DSX.

The three-year chart outlines the steady erosion of shareholder value since 2009. DSX hit an all time high of $41.24 on Oct. 31, 2007 which will take a huge increase in cargo rates to revisit. At this point the downtrend line is still providing resistance as is the 200-day moving average. There have been a couple of opportunities to trade the stock for profit on the upside but the better opportunity would have been to sell the stock short at key junctions.

The six-month chart outlines a number of features worth mentioning. The close-up reveals the resistance along the 200-day moving average and the buy and sell signals generated by the MACD and the RSI. Currently the momentum indicators are trending lower which suggests not jumping in at this point. Once an uptrend is established there will be plenty of opportunities to make money.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

 
Security Price Change
DSX-N Diana Shipping 10.14 -0.06
-0.588 %
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