Deutsche Bank Says Ocean Shippers In New Era Of Prosperity, Initiates On Teekay Tankers Ltd. And StealthGas Inc.

Ocean shipping of dry bulk commodities and oil will nearly double earnings capacity in the next several years while the smaller container ship industry will tread water, an analyst said Tuesday.

Deutsche Bank's Amit Mehrotra launched coverage in the sector, claiming the marine shipping sector "is on the cusp of a new era of prosperity" because of improved supply and demand "and abundant capital to fund profitable growth."

Mehrotra suggested that Deutsche Bank clients supply some of that capital, pleading the case especially in behalf of "top picks" Diana Shipping Inc. (NYSE: DSX), Teekay Tankers Ltd. (NYSE: TNK) and StealthGas Inc. (NASDAQ: GASS).

Perhaps in response, shares of all three companies were gaining in early trading Tuesday.

Spot rates for dry bulk shipping, which accounts for nearly half of all seaborne trade, spiked 70 percent from July, largely on seasonal factors. Mehrotra said sustainability of price increases depends on demand in China and additional supply of shipping capacity, "both of which we see as supportive" into 2015.

The tanker trade, which represents about a quarter of all ocean shipping, is benefiting from an increasing distance between where oil is obtained and where it's refined, Mehrotra said, citing lower U.S. imports and growing Asian refinery capacity.

Although nearly all manufactured goods make their way to container ships, the sector only accounts for 16 percent of ocean shipping. Moreover, it grew at only 2.6 percent in 2012, compared with an average rate of nine percent from 1984 to 2011. Increasing vessel supply will dampen any pressure to raise rates, as well as investor enthusiasm, Mehrotra said.

Diana shares were up 1.3 percent to $10.16; Teekay gained 7.6 percent to $4.15 and StealthGas gained three percent to $9.45 per share.

Other shippers with Buy ratings from Mehrotra include Scorpio Bulkers, Dyanagas LP, DryShips Inc., Navios Maritime Partners L.P. and Seaspan Corp.