Dealmaker’s Diary: This International Shipper Is Setting Sail for Growth

Alpesh Patel|March 14, 2024

Cue the oceanic puns… because I’ve found a global shipping leader that is navigating the sector’s rough seas…

And charting a course for impressive growth and returns.

It’s a $1 billion company with plenty of diversification and 57% annual earnings growth. It comes in at a 9 on my proprietary GVI score… which means it meets my minimum requirement for investing.

It’s also an undervalued gem… but it won’t stay that way for long. The stock price has surged 100%… and I expect that momentum to continue.

Don’t let this ship sail on without you…

Get all the details on the company – including the ticker – in my latest video.

Click on the image below to check it out.

Editor’s Note: Alpesh’s GVI Investor followers just scored another triple-digit gain – this time in ReposiTrak (TRAK) – thanks to his GVI system. His latest recommendation comes out next week. See how you can get in on the action here.

 

Transcript

Hi, friends. This week’s Stock of the Week is a company which is in a sector that has been very much in the news. I don’t mean technology. I mean shipping, of course, given what’s happening in the Middle East. But this company is much more than just one area of geography.

Navios Maritime Partners (NMM) is an international owner and operator of dry cargo and tanker vessels. It owns and operates vessels across different categories from dry bulk container to tanker, and includes charters as well. So it’s got diversification, and that’s important. It earns revenues through chartering of vessels, voyage contracts geographically.

Most of the money comes from Asia. That gives it some protection from what’s happening in the Middle East, for instance.

It’s got a market cap of $1.34 billion. We’re not talking a small company in many regards.

It’s become profitable over the last five years. I’m still putting it as an interesting play because it’s been growing earnings by 57% per year. And revenues I expect will continue with global growth and, of course, given the number of ships getting damaged in the Middle East… that should help the stock.

On my Growth-Value-Income rating – remember this is an algorithm which weighs and measures valuation, growth, dividend yields, income, all of those factors, weighs them, and then scores out of 10 – this is a 9 out of 10, which meets my minimum criteria, of course.

The forecasted P/E ratio of just a multiple of 4.2 makes it very cheap indeed. In other words, you’re paying 4.2 dollars for every expected future dollar of profits. That’s cheap.

Now with Deals of the Week, as it were, and the Dealmaker’s Diary – let’s put it that way – or Stocks of the Week, the cash return on capital invested or the Sortino or the volatility, one of these numbers often doesn’t quite hit all the very strict requirements that I have for my GVI Investor research service.

So here we’ve got CROCI falls a bit short, the cash return on capital invested. If you want to know why that’s important, why Goldman Sachs Wealth Management looks at it, it’s all at this link.

The Sortino’s not bad. That’s the average return versus the risk of missing that – 0.7. I want it to be above 0.3.

Volatility is a little bit volatile above 20%. I prefer stocks to be below 20% because I don’t like ulcers.

But it has been outperforming the market. And more recently, it has been on one heck of a rip from around the $20 mark – well, it’s gone up 100%, basically, in the last – what – five months?

Now, it is one of those where the momentum and the acceleration of momentum – of course, it can’t keep growing exponentially without acceleration of momentum – is one of the things that I’m expecting to continue in the near term until at least it becomes, on a P/E ratio, a bit more fairly valued.

On a discount cash flow, it’s arguably overvalued, but on the forecast P/E – there’s many different ways to value a company, and I like the forecast P/E more because the discount cash flow can be quite susceptible to very small changes in things like interest rates or expected profits.

So it’s one of those which is undervalued on one metric and overvalued on another, but not very overvalued in any event. So that’s the Stock of the Week. As I said, in a sector very much in the news, and overall a company that I like for its momentum as well as the few boxes it ticks on its fundamentals.

I wish you “bon voyage” with the company and a fair wind to carry you far. Thank you.