US Shipping Partners: Leaving Port?

United Shipping's stock price isn't doing too well right now. It's trading at $18.59, just above its 52-week low (the high for the past year is $24.18). But I think this company has serious long-term potential, and this is an undervalued stock right now.

Just last week U.S. Shipping Partners L.P (NYSE: USS) announced third quarter results. While revenue was up 18% from the third quarter of 2005, increasing from $32.6 million to $38.5 million, this long-haul oil and chemical transport company announced a loss of $400,000.

USS's management emphasized the reasons for its poor results: Unexpected expenses due to having to dry dock two of its eight vessels. There were also some one-time expenses resulting from the termination of a hedge and debt extinguishment. They stressed the fact that transportation demands from oil and chemical companies aren't likely to decrease in coming years -- actually, they're likely to increase. I agree.

I also like the fact that USS has been investing for the future, with two new vessels in construction now that are scheduled to become available in 2008. The company's turnaround times have improved, which helped drive up its revenues this year. Moreover, the past few months have seen management buying shares pretty aggressively, suggesting insiders believe in themselves and their company -- always a good sign.

There's also a seriously attractive dividend which makes this company irresistible.

Type of stock: A marine transportation company that ships petroleum and chemicals over long distances.

Price target: I'd buy this now while it's on the low end of its range. The stock may drop a bit more, but I think you'll see it grow over the next couple years, and the 9% dividend yield makes it a safer bet.