DRYS Stock: Buy or Sell?
DRYS stock is the ticker symbol for DryShips Inc., a shipping company that operates dry bulk carriers and offshore support vessels. The company has been in the news lately due to its volatile stock price movements and frequent reverse stock splits. But is DRYS stock a buy or sell?
In this article, we will look at the pros and cons of investing in DRYS stock, as well as some factors that may affect its future performance. We will also provide some tips on how to trade DRYS stock effectively.
Pros of DRYS Stock
One of the main advantages of DRYS stock is its exposure to the global shipping industry, which is expected to grow in the coming years due to increasing demand for commodities and energy. According to a report by Research and Markets, the global dry bulk shipping market is projected to reach $402.65 billion by 2026, growing at a compound annual growth rate (CAGR) of 4.65% from 2019 to 2026.
Another benefit of DRYS stock is its diversified fleet of vessels, which includes Panamax, Kamsarmax, Newcastlemax, and Very Large Gas Carriers (VLGCs). The company also owns and operates offshore support vessels, such as platform supply vessels (PSVs), anchor handling tug supply vessels (AHTSVs), and oil spill recovery vessels (OSRVs). These vessels serve various sectors, such as oil and gas exploration and production, offshore construction, and environmental protection.
Additionally, DRYS stock may offer some value for investors who are looking for a turnaround story. The company has been undergoing a restructuring process since 2016, when it faced a liquidity crisis and defaulted on its debt obligations. Since then, the company has reduced its debt burden, sold some of its assets, raised new capital, and implemented several reverse stock splits to boost its share price and avoid delisting from the Nasdaq.
Cons of DRYS Stock
One of the main drawbacks of DRYS stock is its high volatility and risk. The stock price can fluctuate significantly due to various factors, such as market sentiment, supply and demand dynamics, freight rates, fuel costs, geopolitical events, regulatory changes, and operational issues. For example, in 2017, the stock price soared from $1.32 to $73.34 in a matter of days, only to plummet back to $1.97 in less than a month.
Another disadvantage of DRYS stock is its poor financial performance and outlook. The company has been reporting losses for several years, mainly due to low freight rates, high operating expenses, impairment charges, and interest payments. In 2020, the company posted a net loss of $265.4 million on revenues of $157.8 million. As of March 31, 2021, the company had a negative equity of $179.3 million and a debt-to-equity ratio of 2.17.
Furthermore, DRYS stock may face some challenges in the future due to increased competition and environmental regulations. The shipping industry is highly competitive and fragmented, with many players vying for market share and customers. The industry is also subject to strict environmental standards and regulations that may increase the costs and liabilities of ship owners and operators. For instance, the International Maritime Organization (IMO) has implemented a global sulfur cap of 0.5% on marine fuels since January 1, 2020, which requires ships to use low-sulfur fuels or install scrubbers to reduce emissions.
How to Trade DRYS Stock
If you are interested in trading DRYS stock, here are some tips that may help you:
- Do your own research and analysis before making any investment decisions. Don’t rely on rumors or hype.
- Use technical indicators and charts to identify trends, support and resistance levels, and entry and exit points.
- Set realistic goals and risk-reward ratios. Don’t be greedy or fearful.
- Use stop-loss orders and trailing stops to protect your profits and limit your losses.
- Diversify your portfolio and allocate only a small percentage of your capital to DRYS stock.
DRYS stock is a highly speculative and risky investment that may appeal to some traders who are looking for