With sky-high freight rates and shipping companies marking record profits in 2021, now could be a prime time to consider investing in the shipping industry. Although some hurdles remain, cargo shipping and air freight companies have shown immense pricing power and stand to benefit from surging consumption and a rebound in global trade.
In the upcoming webcast, This Investment Strategy Could Set Sail on Record Shipping Profits, Frank Holmes, CEO, U.S. Global Investors, Executive Chairman, HIVE Blockchain Technologies, will discuss how investors can potentially enhance their portfolios through exposure to the highly profitable shipping industry.
Specifically, the U.S. Global Sea to Sky Cargo ETF (NYSEArca: SEA) tracks the U.S. Global SEA Index and offers investors exposure to the global shipping industry. The underlying index includes companies involved in the marine shipping, air freight/couriers, or other transportation industries, as determined by independent industry listings (collectively, “Cargo Companies”) with an allocation of 70% of the index’s weight to sea shipping companies and 30% to air freight companies at the time of each quarterly reconstitution and rebalance of the index.
The top six shipping companies with a combined market capitalization ranking, cash flow return on invested capital, cash-flow-to-price, and earnings-to-price get a 5% weighting each. By a combined ranking of market capitalization, the next seven shipping companies’ cash flow return on invested capital, cash-flow-to-price, and earnings-to-price get a 4% weighting each. The next six shipping companies, by a combined ranking of market capitalization, cash flow return on invested capital, cash-flow-to price, and earnings-to-price get a 2% weighting each. Lastly, the top 10 air freight companies by a combined ranking of market capitalization, cash flow return on invested capital, cash-flow-to-price, and earnings-to-price each get a 3% weighting each.
Looking ahead, U.S. Global Investors projected a bullish outlook on shipping, cargo, and logistics companies for a number of reasons, including positive indicators for economic trade and growth, favorable pricing power, and high barriers to additional capacity.
Financial advisors who are interested in learning more about the shipping industry can register for the Wednesday, March 9 webcast here.