Healthy Petrochemical Markets Helping Kirby Recover

The inland barge market hasn't fully recovered yet, but it is definitely on its way back, and that has helped drive a good performance from Kirby's (KEX) shares. Between a recovering inland market, a bottoming coastal market, and healthy demand for energy equipment, Kirby should be looking at significantly improving EBITDA, earnings, and free cash flow over the next few years.

I thought Kirby's valuation looked a little full at the time of my last update, and the shares are down a bit since then, underperforming the Dow Jones Transports by about 10%. I do expect Kirby to benefit from ongoing strength in the economy in the short term as well as growing petrochemical production capacity in its core operating area over the medium term, and I do see mid-to-high single-digit annual return potential here, but slowdowns in Permian activity could have a bigger short-term impact on sentiment.

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Healthy Petrochemical Markets Helping Kirby Recover