Shares of Star Bulk Carriers (NASDAQ: SBLK) stock surged to close 9.6% higher on Tuesday.
While there was no Star Bulk-specific news to explain the shares’ rise, it’s still not difficult to figure out the story behind this one: Star Bulk Carriers carries bulk goods, the price of carriage of which is tied to the Baltic Dry Index (BDI) — and right now, the BDI is on fire.
Star Bulk Carriers stock is leaving port — but there still may be time for investors to load up. Image source: Getty Images.
Just four days ago, Reuters reported a 75-point, or 7.4%, rise in the BDI to 1,093 as having been the index’s “biggest one day percentage gain since Nov. 17, 2016.”
Four days later, the BDI just beat that record with a stick.
On Tuesday, the Baltic Dry Index surged an additional 124 points, an 11.3% gain on top of last week’s 7.4% gain. At its new level of 1,217, the BDI has recovered most of the losses it suffered earlier in the month.
Where do we — or, more precisely, where does the BDI, and where does Star Bulk stock — go from here? That’s hard to say, but a bit of perspective probably won’t go amiss. While the BDI’s surge today was certainly an impressive leap in a very short span of time, the fact remains that as recently as Nov. 8, the BDI was trading higher than it is today. What’s more, the BDI is actually down 31% from where it sat in late July, near 1,800.
Similarly, Star Bulk stock cost more on Nov. 8 than it does today — and it cost much, much more — on the order of 30% more — in July. These facts alone suggest that unless the BDI suddenly reverses course and resumes falling, there’s still probably room for Star Bulk stock to run.
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