Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, dry bulk hauler Genco Shipping (NYSE: GNK ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Genco's business and see what CAPS investors are saying about the stock right now.
Genco facts
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Headquarters (Founded)
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New York City (2004)
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Market Cap
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$551.9 million
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Industry
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Shipping
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Trailing-12-Month Revenue
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$377.56 million
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Management
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CEO Robert Buchanan (since 2005)
CFO John Wobensmith (since 2005)
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Return on Equity (Average, Past 3 Years)
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19.1%
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Cash/Debt
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$405.5 million / $1.36 billion
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Competitors
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Excel Maritime (NYSE: EXM )
Eagle Bulk Shipping (NYSE: EGLE )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 1,069 members who have rated Genco believe the stock will outperform the S&P 500 going forward. These bulls include oppdogger and the top-ranked member in all of CAPS, bullishbabo. Just last month, oppdogger tapped Genco as a great way to go for some global growth:
The shipping stocks have been beaten down due to concerns of an oversupply in the next few years. However, as China, India, Brazil, etc. continue to grow, so will demand for shipping. [Genco] is expected to remain profitable indefinitely and represents a tremendous value play.
A recent upswing in the severely beaten-down Baltic Exchange Dry Index has several shipping stocks rebounding a bit. Genco investors, though, haven't shared in all of the fun, as the shares continue to lag behind highly rated rivals like Eagle Bulk and Excel over the past one-month, three-month, and year-to-date time periods.
Of course, with Genco recently issuing about $450 million in debt and 3.2 million shares in equity to fund its big fleet expansion, the stock could just be feeling the usual short-term dilutive side effects. Over the longer term, however, CAPS leader bullishbabo sees a much brighter picture:
Based on the current situation, I believe that a company earning over $4 TTM and still making major moves to grow should not be valued under $20. ...
Three to five years from now, I expect a better economy than we have right now. I expect EPS to exceed $5 at that time. If people are more bullish then, a P/E multiple of 10 would see a price of $50 for [Genco]. That's not unfathomable considering the high of $84.51 in May 2008 (more than 29 times 2008 earnings). I know that was during the commodity boom, but I'm only asking for a multiple of 10 instead of 29, which I believe is quite reasonable. A multiple of 12-15 is still not unthinkable and would put it in line for considerably more than a triple from the current level.
What do you think about Genco, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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