5-Star Stocks Poised to Pop: Paragon Shipping

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drybulk shipper Paragon Shipping (NYSE: PRGN) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Paragon's business and see what CAPS investors are saying about the stock right now.

Paragon facts

Headquarters (Founded)

Voula, Greece (2006)

Market Cap

$200.3 million

Industry

Marine

Trailing-12-Month Revenue

$130.8 million

Management

Founder/CEO Michael Bodouroglou
COO George Skrimizeas

Return on Equity (Average, Past 2 Years)

14.4%

Cash/Debt

$73.55 million / $295.5 million

Dividend Yield

4.3%

Competitors

Diana Shipping (NYSE: DSX  )
Navios Maritime (NYSE: NM  )
DryShips (Nasdaq: DRYS  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 873 members who have rated Paragon believe the stock will outperform the S&P 500 going forward. These bulls include nemo1107 and the top-ranked member in all of CAPS, bullishbabo.

Less than two months ago, nemo117 tapped Paragon as a solid way to ship:

This company is very strong financially, which has allowed them to expand and modernize their fleet in the dry-bulk sector, as well as enter into the more lucrative container sector. I like the outlook for this company and I think as it gains market share, it will only get stronger.

In fact, Paragon's recent $98 million purchase of two new container ships reflects a growing interest by Greek shippers to increase their presence in the sector. Thanks to breakneck Chinese manufacturing growth and attractively low prices, even dry-bulk foe Diana recently diversified into the containership business. Of course, those tasty characteristics are exactly why container shippers Seaspan (NYSE: SSW  ) and Danaos (NYSE: DAC  ) have also been attracting strong attention from Fools.

With Paragon currently trading at a P/E discount to Greek shipping foes Navios, DryShips, and the previously mentioned Diana, its shares might be another attractive way to enter the containership space.

CAPS leader bullishbabo sums it up:

One of the few profitable, relatively low-debt shippers around. Shares outstanding jumped alarmingly in the past year. Upon inspecting the age of the fleet, I'd say the share offerings were probably used to fund the acquisition of two new containerships in the past year. As far as the fleet goes, the ships are mostly Panamax ships. 3 Kamsarmax and 4 Handysize ships are to be acquired in 2011/2012, so there will probably be a combination of further dilution and bank debt on the horizon. Still, I like [Paragon] better than most other drybulk shippers.

What do you think about Paragon, 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!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Seaspan. Try any of our Foolish newsletter services free for 30 days

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 13, 2010, at 5:57 PM, blueed wrote:

    I have held Paragon for over a year, adding on some dips. It has been a very streeful hold. Maybe I can come back and make some money here and in the future.

  • Report this Comment On September 14, 2010, at 11:59 AM, lrm21 wrote:

    Oh Poop, the word is out.

    Stumbled on this gem during the Greek meltdown, has been a bit of a roller coaster, but when shippng turns this should do well.

    Keep in mind however, PRGN has locked in rates for the next 2 years on most of its ships. It means there is a floor during the down turn, but It also will not be able to capitalize as much when lease rates move back up. If lease rates dont move backup, the PRGN is faced with rolling over its contracts at much lower rates, which could jeopardize its attractiveness.

    The other thing is the CFO quit the company 2 months ago without any details. The CEO took over CFO position.

    This is a cause for concern, and I am waiting for some clarification or at least a new replacement.

    Also, dilution as mentioned in the article has been an issue.

    However the CEO has a significant stake in the company, and has navigated tremendously well the downturn, he has stated his intent to keep the dividend secure, the fact that they have traded into containerships is a good sign of an agressive company in a tough sector..

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