Barge-operator Kirby (KEX) has its own sector- and company-specific drivers, but the shares have long tracked overall trends in transportation (like the Dow Jones Transportation Average), and like that index, the shares have been weak since May on various and sundry concerns about whether the recovery has already peaked and whether the resurgence in COVID-19 cases will once again slow the economy.
Down about 12% since my last article, when I thought the valuation was looking pretty full, I’m more interested in these shares today. I do have some longer-term concerns about demand in the barge market and what it implies for pricing and margin, but in the shorter term, increased refinery utilization and increased demand for gasoline and jet fuel (among other products) should drive improving utilization, rates, and margins in the inland marine business, and the slimmed-down Distribution and Services could outperform against no-to-low expectations.
I can see an argument for Kirby shares trading to $70 in the short term, which it makes worth considering today.
Read more here:
Kirby Looking More Interesting After Some Recent Underperformance
No comments:
Post a Comment