According to a piece in Yahoo Finance written by financial writer and reporter Jaimini Desai this week, now could be a good time to invest in container and breakbulk shipping line ZIM Integrated Shipping Services Ltd. (ZIM).
Desai says IPOs are always an interesting asset class as there is considerable upside but it comes with more risk. Recently, IPOs have underperformed, but it could be an opportunity to invest in new ones such as ZIM Integrated Shipping Services Ltd. (ZIM), listed earlier this year.
Initial Public Offerings (IPOs) occur when a privately held company lists its shares on a stock exchange, thus becoming “public.” Companies usually choose to go public to raise money for expansion.
“In 2021, the Renaissance IPO ETF (IPO) has been less than stellar, down 3% year to date (YTD). This underperformance and the recent drop in longer-term rates allow investors to scoop up shares in recent IPOs. Two of my favorites are ZIM Integrated Shipping Services Ltd. (ZIM) and ZipRecruiter (ZIP).”
ZIM Integrated Shipping Services Ltd. (ZIM)
ZIM is an Israel-based provider of container shipping and additional shipping services. It is focused primarily on cargo. The company’s cargo services include breakbulk, out of gauge, project, reefer, dangerous and dry cargo. It is one of the top 20 carriers in the world.
Desai continues, ZIM’s inclusion is also a reflection that in 2021, IPOs are coming from all sorts of industries, while they were concentrated in tech last year. Further, the shipping industry has been a major topic of conservation as ports around the world are backed up. This has led to shipping rates hitting 13-year highs for many categories.
While the prospects for the shipping sector remain positive, ZIM also stands out among its peers with its forward price to earnings ratio of 6.1. This makes it one of the cheaper stocks in the sector. The company also has one of the lower debt loads and $10 in cash per share.
Recently, the stock has declined by 25% on global growth concerns which could prove to be a tantalizing entry point. Wall Street analysts are also bullish on the stock as it has a consensus price target of $53.4 which implies a 40% upside from current levels.
According to Desai, ZIM shares fell $37.51 (-100.00%) in premarket trading Wednesday (21 July 2021). Year-to-date, ZIM has gained 228.70%, versus a 16.30% rise in the benchmark S&P 500 index during the same period.