I'm not going to bury the lede on this one, folks: The S&P 500 is expensive.

At a recent valuation of nearly 29 times trailing earnings, the stock market as a whole has only been as expensive as it is today a handful of times in the past 150 years. On average, if you buy a share of stock today, it will take you nearly three decades for that stock to earn enough money to pay back your investment. And historically speaking, when stock markets get as expensive as this one currently is, they're bound to crash sooner or later. 

But so what? Just because most stocks are expensive doesn't mean all of them are. And in fact, despite how expensive the S&P is on the whole, I've found one stock that's cheap enough that I think it's worth a gamble: Costamare (NYSE: CMRE).

Red stock market arrow goes down across a field of $100 bills

Image source: Getty Images.

Buy low ...

Why do I think Costamare has a good chance of turning into a winning investment? Let's start with the stock price. At $5.23 per share, Costamare costs about 22.2 times trailing earnings, which is already 22% cheaper than the average 28.5 P/E of the S&P -- and this story gets even better.

Costamare is a cash-generating monster. Over the past five years, this container shipping company has reported GAAP earnings of $465 million, but generated $774 million in actual cash profits (also known as "free cash flow"). Over the past year, Costamare's free cash flow of $191 million has dwarfed its reported net income of barely $28 million -- meaning that while the stock is already cheaper than average at 22.2 times earnings, it's downright cheap, period, at a valuation of only 3.3 times free cash flow.

Now, is there a reason for Costamare stock looking as cheap as it is? There is. In fact, there are reasons -- plural. Chief among them is the fact that Costamare has to buy ships to move containers for its customers, and ships aren't cheap. Paying to build out its fleet of 75 containerships has forced Costamare to take on some $1.5 billion in debt.

Even after adding debt to Costamare's market cap (and subtract cash on hand) to arrive at the actual value of the enterprise, though, the company's enterprise value-to-free cash flow still works out to a cheap 10.2-times ratio.

... sell high

Now here's what might get that value moving a bit higher, and help deliver a future profit to investors who buy Costamare stock today:

As recently as July, analysts at investment bank Stifel Nicolaus speculated that, while the containership leasing market is "still far from fully recovered," it seemed to be recovering. Q2 may have been the trough quarter for this business, and it's possible that growth will resume shortly.

And indeed, just two months later, The Wall Street Journal reported earlier this month that "container imports are flowing back into the U.S. after a six-month hiatus."

Demand for imports, and the shipping containers that carry imported goods, and the transport ships that carry the containers, got rolled back as retailers curtailed orders during the pandemic. Now, however, the economy is cautiously opening up again, and the holiday shopping season is looming -- so retailers are stocking up again. 

Demand for imported goods "is filling up container ships across the Pacific and operators are restoring cargo-vessel sailings that were cut by as much as a third at the height of the pandemic closures from March to June," continues the Journal. Indeed, the month of August may just have been "the best August in the history of the Port of Los Angeles," with twice as many containerships entering port as arrived during the pandemic-plagued second quarter.

What it all means for Costamare

If that sounds like something that should be good news for Costamare, well, I think it will be. The cost of shipping a single container from Shanghai to California earlier this week hit a record $3,758, up more than double from the start of this year, and shipping rates to the East Coast are even higher. And when you add higher prices per container shipped to greater numbers of containers being shipped -- well, Costamare's profits should look a whole lot brighter in this year's second half than they did in the first.

When you consider further than analysts polled by S&P Global Market Intelligence are forecasting a total of 65% pro forma earnings growth at Costamare over the next two years, the growth story for this stock looks like it's just getting started.

And for Costamare investors, it looks like our ship is about to come in.