KNOT Offshore Partners LP KNOP is benefiting from the bullishness surrounding the tanker market. Its shareholder-friendly approach bodes well for the company. Due to tailwinds, KNOP’s shares have performed impressively on the bourse. If you have not taken advantage of its share price appreciation yet, it’s time to do so.

Let’s delve deeper.

Factors Favoring KNOP Stock

Robust Price Performance:  KNOT Offshore has gained 27.6% in the past six months, surpassing the industry’s 9.7% growth.

Six-Month Price Performance

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Northward Estimate Revisions: The Zacks Consensus Estimate for the current-quarter bottom line gained 50% in the past 60 days. For the December quarter, the consensus mark has moved 75% north at the same time. The favorable estimate revisions indicate brokers’ confidence in the stock.

Solid Zacks Rank: KNOP currently sports a Zacks Rank #1 (Strong Buy).

Bullish Industry Rank: The industry to which KNOT Offshore belongs currently has a Zacks Industry Rank of 91 (out of 252). Such a favorable rank places it in the top 36% of Zacks industries. Studies have shown that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.

Growth Drivers: KNOT Offshore is benefiting from the bullishness surrounding the tanker market as product tanker rates are currently at healthy levels despite minor hiccups. Also, normalization of economic activities and an uptick in world trade following the removal of COVID-19-induced restrictions are aiding KNOP’s top-line performance.

The attacks by Yemen’s Houthi militants on vessels in the Red Sea have disrupted maritime trade. Keeping the safety of the crew in mind, KNOP is adopting the longer and costlier route around Cape of Good Hope in South Africa rather than through the Suez Canal. Reduced container availability due to the Red Sea tensions has resulted in a rise in freight rates. Lower capacity is expected to have boosted the bottom line. Increased fleet utilization is also aiding KNOP.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may also consider C.H. Robinson Worldwide CHRW and Air Transport Service Group ATSG.

C.H. Robinson Worldwide currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

CHRW has an expected earnings growth rate of 25.2% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 51% in the past six months.

Air Transport Service Group, too, carries a Zacks Rank #2 at present. The company has a mixed track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missing twice. The average miss is 7.7%. Shares of ATSG have gained 22% in the past six months.

 

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