Drybulk Shipbuilders Going Nuts

I have been following this industry lately and these stocks keep going up and up. With Dryships going up 7.5% just today.

Analyst Douglas J. Mavrinac said he continues to see drybulk charter
rates hitting all-time highs through the end of the year. Mavrinac reiterated
his "Buy" rating on Diana Shipping Inc., citing the Greek carrier's increased
"financial flexibility" following a 10 million share public offering on Friday,
with proceeds estimated at about $250 million.

One thing interesting about this industry is there is something called the Baltic Dry Index that measures 40 shipping lanes on a time charter and voyage basis. This thing is at an all time high at 9370 and keeps going up and up. I guess all that trade between China and the rest of the world is really firing this industry.

The company I have my eye on is Diana Shipping Inc (DSX) which is slightly cheaper then some of their peers with a 19 P/E and they pay a 2.04 a year dividend. I like that built in 7.10% yield cushion when you are going in. They are also getting a new Capesize bulk carrier online in Nov 2007 right when shipping prices are at all-time highs. They are also building 2 new Capesizes but they won't be delivered until 2010. The only problem is that it is pretty hard to expand capacity because each of these ships cost like $81 million or more. So if day rates drop due to a recession or Chinese problems then these stocks will drop like a rock with them.