The stock of ZIM integrated shipping services has been updated

Investment houses like it The Goldman Sachs Group Inc. NYSE:GS they have an average win rate of over 85% in their trading activity. You may wonder how they achieve these results, or you can rest assured that their idea generation process is largely based on “top-down” analysis. Today you will see what these professionals might be looking at.

This process leads to a spike in interest in the transportation sector for reasons that will become clear shortly. Using MarketBeat’s research tools, you can start selecting stocks in this space. Before getting into everything and making your selection, remember this ZIM integrated shipping services NYSE: ZIM it’s a great deal at a ridiculous discount today.

As shipping and freight rates shift, stocks like ZIM will likely see an increase in their earnings per share (EPS) in subsequent quarterly results. As just one of the many reasons to believe in the stock, you’ll find out why Wall Street analysts have upgraded their price targets on the stock, along with some institutional buying.

Starting from the top

To get a better picture of the current economic environment, traders can look to the ISM manufacturing PMI index. While a month of data can give you great insights, you should take more than a couple of months to tune into the market wave.

If you dig deeper, you’ll see that the transportation sector has emerged from December’s contraction and is now expanding for two consecutive months. Knowing that each quarterly earnings report contains the last three months’ results, you can probably imagine that stocks exposed to shipping (and its rising rates) can beat earnings expectations.

According to last month’s employment data, the U.S. economy created 275,000 jobs. Of these, 19,700 (or 7.2%) went to the transportation and storage sector. Now, why else would hiring managers and logistics planners engage in hiring if not for the expectation of busier times ahead?

Now that geopolitical tensions are rising in the Hamas strip, Israel-based ZIM Integrated stock is suffering from a temporary downturn. The stock is trading at 89% of its 52-week high, while peers appreciate it Kirby Co. New York Stock Exchange: KEX AND Scorpio Tankers Inc. NYSE: STNG exchanges at 100% and 95% respectively.

The lackluster performance must surely reflect rising shipping rates today. According to futures contract data from CME Group Inc. NASDAQ: ECMtraders are offering higher contracts for May and June 2024.

These expectations are also in line with the FedWatch tool, which is pushing for interest rate cuts expected in those same months. If the Federal Reserve (Fed) lowers interest rates by those dates, global shipping and freight rates will likely rise as much as traders expect due to increased global trade.

Screen for the best

Now you know that ZIM Integrated offers a discount to competitors, but is it cheap for a reason? This is probably a hitch due to conflicts affecting shipping routes. You’ll see ZIM gain some love by updating the list of stocks recently updated by analysts.

The ones they work for Jefferies Financial Group Inc. New York Stock Exchange: JEF see a valuation as high as $20 per share for ZIM. These price targets reflect an upside of nearly 72% from the stock’s current price.

But ratings aren’t the only thing that makes ZIM the top choice in the industry. These analysts expect the stock’s EPS to grow as much as 30% over the next twelve months, which is significantly higher than the industry average of 14%.

Knowing that the industry trend is favorable and that the global landscape is set to have ZIM likely to outperform subsequent quarterly earnings, some institutional buyers have started buying the shares. Barclays added 19.8% to its $1.1 million position in ZIM this month, but that’s not all.

Charles Schwab Co. NYSE:SW it also added 75% to its increased $2.9 million already in stock. In a vote of confidence for industry-leading growth, these asset managers see the writing on the wall: “unjustified” double-digit discounts.

Based on the price-to-book (P/B) valuation, ZIM Integrated shares trade at a 50% discount to book value, or a ratio of 0.5x. On the other hand, competitors Kirby and Scorpio trade at 1.7x and 2.8x ratios, respectively. This spread makes ZIM a ridiculous discount based on a fear-driven market.

Before you consider Charles Schwab, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Charles Schwab wasn’t on the list.

While Charles Schwab currently has a “Hold” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here