This from Mike:

It’s not the time to try to call a bottom… but it is time to plan for it.

Our favorite leading indicator of economic activity, the Baltic Dry Index, will likely be the first to signal the end of a recession. And it provides a convenient clue to one stock I believe will comeback faster than most others, once the market-wide comeback is underway.

The Baltic Dry measure shipping costs, and therefore shipping activity, and is therefore a great “boots on the ground” measure of what’s going on in the world economy. When costs are up, it benefits shipping companies. My favorite right now is Frontline (NYSE: FRO).

Frontline focuses specifically on tanker ships for transporting oil. When economic activity picks up, so will oil prices and shipping rates. And that plays right into Frontline’s hands.

The oil focus means Frontline’s recent quarters haven’t been as bad as other shippers because of oil stored offshore to take advantage of the contango situation.

Overall, the company still posted growth for 2008, but last week’s quarterly numbers were certainly lackluster. Earnings per day on a “very large crude carrier” dropped to $61,500 from $96,500 a year earlier.

Still, Frontline management seems to be making the right moves in tough times. It’s proceeding with cautious investment in new capacity, switching some of its more profitable daily arrangements to more predictable long-term contracts.

Even so, the stock is getting hammered again today, down another 4% as of this writing.

But that puts the stock price at about two times trailing earnings. And with enough cash flow to cover interest costs, I’m sure Frontline can remain a going concern through the crisis.

When spending does pick up those who buy Frontline at, or near, the market bottom will likely be the first to benefit.

Source:  Frontline (NYSE: FRO): Stock of the Day

This from TFN’s Andrew Snyder:

The two-day rally started yesterday when DryShips (NASDAQ:DRYS) announced it reached a deal to restructure two of its loans. Shares jumped from $5 to $6 yesterday, and up to and over the $7 mark today.

This is great news for an industry that has been reeling in pain after the collapse of the global credit market. After years of expansion in a dire effort to keep up with exploding global demand, the industry is laden with debt.

Ships ain’t cheap

With a bit of light at the end of the credit tunnel, paying for all those new ships may not mean selling them at bargain basement prices, especially now that it looks like the rates shippers charge may be on the rise.

The closely monitored Baltic Dry Index made its biggest one-day move since this mess started last fall. Top rates hit four-month highs of $22,000 and are expected to climb as high as $30,000 in the coming weeks, thanks to increased demand from the Chinese steel industry.

So who are the winners and how do you play this news? First, in addition to dry ships take a look at companies like Eagle Bulk Shipping (NASDAQ:EGLE) and Excel Maritime Carriers (NYSE:EXM). Those two are up by 30% and 25%, respectively.

It sounds like a great, wealth-generating turnaround, but only the folks savvy enough to buy at recent lows are counting their profits. After all, shares of Excel hit lows more than 94% off last spring’s high.  There is plenty of more room to climb.

I would treat this sector like any other speculative investment. There are a lot of variables surrounding the shipping industry and almost all of them depend on a growing global economy. Right now, that could be months, if not years away.

But with credit becoming available and shipping rates rising once again, there is hope. At this point, the reward may not have overpowered the significant risk of selected industry bankruptcies, but we are getting much closer. As soon as more news of debt restructuring hits, you should gobble up all the shares your speculative portfolio can handle.

There is a good chance we are witnessing a strong turnaround in the indicative sector.

Source: The shipping industry stays afloat