Nothing can make tomorrow's leaders stand apart from the pack quite like a knack for exhibiting grace under pressure. This can apply to companies as well, and given the challenging economic environment, I consider this an important means by which to pinpoint tomorrow's outperformers amid the wasteland of seemingly inexpensive stocks.
I try to steer entirely clear of sectors that are structurally impaired and show little indication of improvement on the horizon. I warned investors to run from the mortgage lenders like Bank of America
But for whatever reason, I seem to have ignored my own guidelines when it comes to the dry bulk shippers. Talk about structural impairment; the persistent oversupply of bulk cargo vessels worldwide makes the U.S. housing inventory appear tame by comparison! Bank of America may have well-earned my designation as the worst stock for 2010, but let's recall that I considered DryShips
In select operators like Diana Shipping
Genco exhibited tremendous grace under pressure by delivering a $1.6 million profit during the third quarter amid some of the more disastrous market conditions one can imagine. This despite an average daily charter rate that plummeted nearly 39% to $16,447! And following several very difficult years for the industry at large, here stands a company with a cash position of $301.5 million -- more than the company's entire market capitalization!. Genco's total long-term debt stands at a rather substantial $1.75 billion, but Genco's capacity to operate profitably through this unseemly charter-rate environment leaves me confident that Genco will first survive, and then thrive.
Genco subsidiary Baltic Trading