Stock Market Watch: Get Cheap Buys on Undervalued Stock

As a veteran investor that has dabbled in the rough seas of the financial ocean we call the stock market, I can say with certainty that there are times that serve as curiosities as to why the public acts as spontaneous and irrational as they do. For the last year, I've been investing in dry bulk shipping, an undervalued sector of the market that has had a blind eye turned towards it. I must say that it is possibly the most undervalued industry out there. Perhaps it's the investor's lack of understanding in regards to how the industry categorizes itself into three sectors (dry, container, wet) that independently act differently than the other. Perhaps its just the foreign nature of the industry that is little known to the American investor. Whatever the case, the sector has found little respect in the midst of its most profitable times even in light of full blown recession.

To be explicitly clear, dry bulk shipping's all about the oceanic transportation of bulky materials (ie. iron, coal, fertilizer, grain, steel, etc etc). Dry bulk companies tend to follow the BDI (Baltic Dry Index), which is setting record highs this year. This is all one really needs to know about this industry:

1) Demand is exceedingly high due to poor planning by the shipping industry a few years back. Because industries reliant on ocean transportaion (in particular the ones mentioned above) have been steaming forward with international growth, demand has steadily risen the charter rates by which ships are commissioned.

2) Supply is extremely low because of failures at the shipyards to deliver on time (so far only about 20-30% of the orders to deliver this year have been sent & we're already in July). The credit crunch also hurt companies from getting financing further setting delays on deliveries.

3) Ships are typically chartered for years out, meaning there are degrees of steady expectation as to the outlook of shipping companies.