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.
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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.