Ahoy! Bermuda-based "dry bulk" shipping company Excel Maritime Carriers
People familiar with shipping will first think of industry giants Teekay Shipping
Compare that with Excel -- with $20 million in cash and total debt of $7 million -- which moves "natural resources" like coal, iron ore, and grain in bulk. Right now, the demand for dry goods is strong -- particularly in Asia.
What will really make investors take notice is the company's 60% operating margin. For comparison, Wall Street's high-flying darling Taser
While Taser's weapons don't compete in a crowded market, Excel's shipping services certainly do. To control costs, the company has purchased its five ships second-hand. To be able to benefit quickly from rising shipping costs, the company operates in the spot and short-term charter markets.
How can the company expand rapidly and avoid a debt load that might sink it to Davey Jones' locker? The secret is internally funded growth. Consider that the company purchased a ship for $5.9 million in 2002, yet earned $17.2 million in the first six months of this year.
Will the company grow quickly but conservatively? That is not known, and a reason why the stock is volatile. Up over 10% Friday morning, it was still 20% below the peak it reached Monday.
The stock trades for 19 times trailing earnings. Insiders hold 47% of the stock; institutions less than 1%. There is no analyst coverage. There are many risks as this company expands, but the potential for big profits is clearly evident and undiscovered by Wall Street.
For other Foolish analysis of lesser-known stocks, click to:
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.
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