Can You Invest in Port Stocks?

Dear Reader,

By now, I’m sure you’ve heard about the dockworkers strike at ports up and down the eastern seaboard of the United States. Estimates are that for every day ports are shut, the U.S. economy loses $5 billion dollars. And that for every day ports are closed, it will take five days to get back to speed once they’re opened again. That’s likely got investors wondering what’s happening to port stocks and if there’s an opportunity to “buy when there’s blood in the streets.”

And if you’re one of them, then I’ve got some good news and I’ve got some bad news for you. First the bad news: Technically, there’s no such thing as “port stocks” in the United States. You see, most major U.S. ports are owned by public organizations associated with a local government called port authorities.

So when it comes to the companies that own the major ports, there aren’t any. But that doesn’t mean there aren’t stocks that are associated with the ports. And I guess you could call those port stocks if you want. So let’s talk about them…

Port Stocks: Terminal Operating Companies

In some cases, those government-run port authorities operate all or some of the terminals at those major ports. But in most instances, they lease the port facilities to several different companies. And those businesses are called terminal operating companies.

Many of them are publicly traded, giving you an assortment of port stocks to choose from:

• A.P. Møller-Mærsk (OTC: AMKBY) — Denmark
• Evergreen Marine Corporation (OTC: EVGZF) — Taiwan
• Cosco Shipping Holdings Co. Ltd. (OTC: CICOY) — China
• CK Hutchison Holdings Limited (OTC: CKHUY) — Hong Kong

The bad news here is that most of those companies are foreign, with Chinese companies owning stakes in terminals at five U.S. ports and APM Terminals, a subsidiary of A.P. Møller-Mærsk (OTC: AMKBY), controlling numerous ports as well.

The biggest American company, Ports America, remains privately held by… wait for it… the Canada Pension Plan Investment Board. You really can’t make this stuff up. So when it comes to these kinds of port stocks, your choices are a little limited.

Port Stocks: Shipping Companies

Those marine terminal operators are sure to be some of the port stocks impacted by this port strike. But they’re not the only ones. Shipping companies could also count as port stocks and they’re certain to get hit with some selling too.

As with terminal operating companies, most shipping stocks are international companies. However, many of them trade on U.S. exchanges, so they’re easily accessible to U.S. investors looking for port stocks. And in this case, the two biggest shipping companies that could be deemed port stocks are actually U.S. companies:

• Kirby Corp. (NYSE: KEX) — USA
• Matson Inc. (NYSE: MATX) — USA

Combined, Kirby and Matson represent over $11 billion in port stocks market capitalization. And right now, despite being American companies, they can’t get their ships loaded and on to their destinations. No grain from the Midwest. No oil or LNG from the Gulf Coast. No cars from Detroit.

That’s bound to hurt their bottom lines in the coming quarter. And investors have taken notice. But as bigger port stocks, Kirby and Matson have weathered the storm better than most, having fallen less than 2% each. That kind of resilience could lead to outperformance on the way up, too.

Port Stocks: Railroads

One last industry that might be getting overlooked in the search for port stocks that could be affected by the port strike are those of the railroads. Dockworkers don’t only unload freight from ships as they come in.

They also make sure it gets on the right boat so that our exports reach their destination. And right now those exports are stuck in limbo.

Railroads run right into the ports to drop off freight from all over the country — think about the grain, cars, and energy that’s not getting loaded onto those ships. And they also pick up things and deliver them to consumers on their way back across the nation.

Pretty much everything we use travels on trains after it comes off of ships. So the railroad stocks are definitely port stocks during this strike.

• Union Pacific Corp. (NYSE: UNP) — USA
• Canadian Pacific Kansas City Limited (NYSE: CP) — Canada
• Canadian National Railway Co. (NYSE: CNI) — Canada
• CSX Corp. (NASDAQ: CSX) — USA
• Norfolk Southern Corp. (NYSE: NSC) — USA

Of the five biggest railroads in the entire world, three of them are American companies and two are Canadian (so basically American, too). All five of them have dropped between 2% and 6% over the past month as the strike became more and more likely.

And all five are likely to fall further if the strike isn’t resolved quickly. But all five are also likely to rebound after the ports get back to work again. And all five could represent an interesting opportunity for brave investors.

The Bottom Line on Port Stocks

The bottom line here is that, while there might not be port stocks that let you invest directly in the ports themselves, there are plenty of stocks that count as port stocks during a port strike.

And the other bullet point is that this strike will hurt those port stocks in the short term. But it’s temporary. And those port stocks are likely to recover everything they lose and then some.

The stock market runs in cycles of boom and bust. And it’s often when things look the worst that they’re about to get better.

The story with port stocks is similar to that of lithium stocks. They might be down now, but they’re not going to stay there forever.

Successful investing calls for bold decisions. And we’re here to help you ignore the emotions of the masses and capitalize on the imbalances the market constantly presents.

So keep coming back to Wealth Daily and keep yourself a step ahead of the crowd.