Castor Maritime Stock Price Rises 24% – Time to Buy CTRM Stock?

Castor Maritime (CTRM) stock rose almost 24% yesterday and was trading higher in premarkets today also. What’s the forecast for the company and should you buy it now?

Despite the recent rise, CTRM stock trades at a big discount to its 52-week high prices. The stock had surged earlier this year amid the Reddit frenzy. However, like all other Reddit names, it plummeted after the initial bump.

Castor Maritime stock recent developments

Castor Maritime reported revenues of $21.8 million in the second quarter of 2021 which were significantly higher than the $2.6 million that it had posted in the corresponding period in 2020. CTRM has been expanding its fleet through a mix of debt and equity. It took deliveries of 12 vessels in the second quarter and expects to conclude the remaining three vessel acquisitions in the current quarter.

CTRM would have a total fleet of 26 vessels after completing the announced acquisitions out of 18 would be dry bulk carriers and the remaining would be tankers. It would have an aggregate capacity of 2.2 million dwt after the acquisitions are completed. “The first six months of 2021 was a transformational period for our Company, as we were able to raise $262.5 million of equity and $33.3 million of debt and grow our fleet from 6 vessels at the end of 2020 to 26 vessels on a fully delivered basis,” said Castor Maritime CEO Petros Panagiotidis.

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CTRM second-quarter earnings

Castor Maritime reported an adjusted EBITDA of $10 million in the quarter which was up tenfold from the corresponding quarter in 2020. The increase in earnings has come from the dual impact of higher charter rates amid multi-year high shipping rates and the increase in CTRM’s vessels.

Castor Maritime had cash and cash equivalents of $42.7 million at the end of June. The cash has increased this year amid the massive capital raise done by the company. In June, it had entered into an agreement for an at-the-market stock sale arrangement to raise $300 million. It has raised only $9.4 million so far. However, given the recent surge in its stock price, CTRM might issue more shares now.

Castor Maritime is growing fast

A section of the market is concerned over the frequent debt and equity issuance as it would lead to dilution and higher interest costs. However, many others see it as a sign of growth as Castor Maritime is investing the money in growth. The second-quarter earnings release justify the investments as the company’s earnings have increased sharply over the last year.

The dry bulk index is near multi-year highs which bodes well for shipping companies like Castor Maritime. The tanker market is also looking strong amid the revival in the global economy. Sounding an optimistic tone, Panagiotidis said “Strong demand for dry bulk transportation services has resulted in robust freight rates, with the upward momentum expected to be sustained by the tight vessel supply and historically low newbuilding orderbook.”

CTRM stock technical analysis

CTRM has crossed above its short-term moving averages but still trades below the long-term moving averages. The stock needs to cross the 50-day SMA (simple moving average) to sustain the uptrend. Looking at the uptrend and the pre-market price action, Castor Maritime might test the level soon. Looking at the other indicators, the 14-day RSI (relative strength index) is neutral at 56.8. However, the 12,26 MACD (moving average convergence divergence) gives a buy signal.

Castor Maritime stock valuation

Castor Maritime stock trades at an NTM (next-12 months) EV-to-EBITDA multiple of 18.3x and a price-to-book value multiple of 0.75x. Both the multiples look reasonable looking at the outlook for the shipping sector. CTRM stock could rise more from these levels.

The stock is a good way to play the uptrend in the global shipping industry and benefit from Castor Maritime’s rising vessel profile.

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