Castor Maritime (NASDAQ:CTRM) is a small however rising delivery firm based mostly within the nation of Cyprus. In 2018, Castor owned a single dry bulk delivery vessel. In 2020, CTRM inventory spent a lot of the yr as a penny inventory — even because it boosted its fleet measurement.
Nonetheless, the inventory has now posted massive positive factors in 2021. After opening the yr at 19 cents, shares rocketed to an in depth of $1.73 on Feb. 11. Since then, Castor Maritime inventory has retreated to under a greenback, nevertheless it’s nonetheless up almost 280% year-to-date (YTD).
If that sounds suspicious, it ought to. A penny inventory and a little-known firm that instantly sees shares spike in 2021? That has all the signs of a Reddit inventory. In truth, Castor has certainly been fashionable on the subreddit discussion board r/WallStreetBets. It’s additionally being closely traded on Robinhood.
However there are another elements at play right here, together with Castor signing extra offers to increase its fleet. So, possibly there’s extra to the CTRM inventory acquire than simply Reddit.
CTRM Inventory and the Dry Bulk Transport Market
What precisely do dry bulk delivery firms like Castor Maritime transport? Dry-bulk items are largely uncooked supplies like grain, coal and iron ore. And the dry bulk delivery market is forecast to conserving rising. In truth, China — which has already recovered from the pandemic — continues to drive a lot of that rising demand. In a report on the business, Transparency Market Research notes:
“Speedy urbanization, industrialization, and financial progress is prone to propel the dry bulk delivery market throughout the globe. Rising infrastructure improvement, which requires vital use of metal merchandise, is a key issue for driving the dry bulk delivery market throughout the globe. Main investments throughout the globe by varied governments in transportation are anticipated to spice up the dry bulk delivery market.”
Furthermore, in January, Castor introduced it was including to its bulk service fleet, having bought a 2006 Capesize dry bulk service for $17.5 million.
January 2021 reportedly had a few of the highest dry bulk rates in a decade. So, if that pattern continues, it’s excellent news for CTRM inventory.
What In regards to the Oil Market?
As you most likely already know, 2020 was not variety to grease firms. An oil-price conflict kicked off simply because the pandemic was beginning to crater demand. On the identical time, electrical automobiles (EVs) started to surge in recognition. One of many iconic photographs from early final yr was a fleet of crude-oil tankers anchored off the coast of California as a result of no refineries had sufficient room remaining to retailer their cargo. Now, oil stocks are nonetheless a really dangerous play, however demand has begun to creep again up.
On Feb. 11, Castor Maritime introduced it was purchasing a pair of 2005 Korean-built Aframax LR2 tankers. Ships of this class have a cargo capability of between 80,000 and 120,000 tons deadweight (DWT). On the subject of transiting the Suez Canal, they’re exceeded solely by the Suezmax class. Aframax ships even have an excellent measurement for ports which might be unable to deal with bigger tankers.
Castor Maritime has absolutely contracted each ships at $15,000 per day. As a part of the deal, the corporate additionally signed a “50% profit-sharing association.” So, Castor doesn’t pocket the total quantity, however the threat of the acquisition has been lowered, too.
This buy marks Castor’s first foray into tankers. In a press launch, the corporate explained the move:
“As we’ve got communicated beforehand, we’re a Firm that goals to reap the benefits of engaging alternatives offered to us, because the delivery cycles evolve. Subsequently, we’re very excited to be getting into the tanker market, at what we imagine is an opportune time for this sector.”
If the oil market continues to rebound, the acquisition of these two Aframax tankers will show to be prescient, particularly at a value pushed down by the latest glut of oil. When Castor introduced the information, it triggered a forty five% spike within the CTRM inventory value.
Castor Maritime has made massive strikes this yr, persevering with an aggressive push to develop the scale of its dry bulk items fleet whereas additionally increasing into oil tankers. Sure, its fleet consists of older ships that can value extra to service and keep, however the firm snapped them up at depressed costs.
So, when the worldwide financial system recovers post-pandemic, Castor Maritime is in place to select up enterprise and develop income.
Some traders are involved that the latest enhance in CTRM inventory is courtesy of Reddit. That would imply that any near-term positive factors are actually already priced in. Sadly, although, solely time will inform.
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On the date of publication, neither Louis Navellier nor the InvestorPlace Analysis Employees member primarily answerable for this text held (both instantly or not directly) any positions within the securities talked about on this article.
Louis Navellier had an unconventional begin, as a grad scholar who unintentionally constructed a market-beating inventory system — with returns rivaling even Warren Buffett. In his newest feat, Louis found the “Grasp Key” to cashing in on the biggest tech revolution of this (or any) generation.