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Experienced Investor

Stock of the week: Clarkson

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
11/07/2016

Helal Miah, investment research analyst at The Share Centre, picks shipbroker Clarkson as his stock of the week for contrarian investors.

Clarkson, the world’s biggest shipbroker, might not be for the faint-hearted, but contrarian investors prepared to take a higher level of risk may consider the company to be worth a punt.

Clarkson provides a significant role in the movement of commodities and finished goods around the world. Although the Baltic Dry Bulk Index, an indicator of economic conditions and global growth, has recently tested an all-time low, investors could take the view that demand for the cargos that Clarkson specialises in will only strengthen from here on in.

Investors should acknowledge that the challenging conditions highlighted by the CEO in recent updates led to a profit warning in July. The fall in freight rates and continuing pressure on the offshore industry have both impacted and as a result profits for 2016 will be materially lower than the full year 2015.

However we consider the shares to be a ‘buy’ for a contrarian investor taking a long-term view on a return to demand for global shipping. In the present climate, investors should be prepared to accept a higher level of risk and only drip feed.