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

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.

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