What companies are tomorrow's big winners? In our ongoing series, I'm chatting with Fool analysts and advisors to discover the stocks they're watching and the catalysts that would signal it's time to buy. Today, Motley Fool analyst Paul Chi shares an undervalued company that sits at the top of his watchlist. (For your convenience, you can now create your own version at MyWatchlist.com, your free customized hub to follow the performance and Fool coverage of the companies you care about.)

The drybulk shipping industry is a mess. The Baltic Dry Index hit historical lows earlier this month. The new ship order book is bloated. Supply soon will far outpace shipping demand. Even if you have no idea what any of that means, you can tell it ain't good. In short, the companies that ship iron ore and coal around the world watched as demand for those commodities rose and then ordered a whole bunch of new ships in order to accommodate that demand ... which then slowed. So the shippers have a whole bunch of new ships -- roughly 40% to 50% of their existing fleets -- coming on board, and the demand won't be anything close to what was expected. That will lead to decreased rates and margins as the shippers cut prices to fill their ships.

Amid this mess, Paul sees more than a glimmer of hope in Genco Shipping & Trading (NYSE: GNK). The New York-based company transports iron ore, coal, grain, steel products, and other drybulk cargo along worldwide shipping routes. The company has a new fleet and strong management, and it's significantly mispriced relative to its peers. Trading at only four times earnings, Genco is a value even with the looming disparity between supply and demand, Paul says.

That's not to say the company has hit bottom -- it still has room to fall, despite tumbling nearly 40% for the year. Every time one of its competitors announces unimpressive earnings, all the industry's players take a hit. DryShips (Nasdaq: DRYS) has fared better, with shares climbing roughly 40% in the past month or so as a result of exceeding financial expectations and announcing that more than 80% of its ship days are already fixed for 2011. Diana Shipping (NYSE: DSX) is actually the "safe" company of the bunch, according to Paul, with a significantly lower debt-to-equity ratio than its peers. But he's not as interested because he views Diana as moderately priced, as opposed to the outright cheap status of Genco.

"All of these companies aren't necessarily bad," Paul says, "but the industry as a whole just has ship supply problems to face."

Paul thinks many of these shippers should be able to adapt to the changing climate, but Genco is the one he's watching because of the value disconnect.

And that's why it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, new and free from the Fool. Click below to start following one of the stocks mentioned above:

Roger Friedman doesn't own shares of any companies mentioned, but they're all now on his watchlist. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.