For OceanFreight, the profits are all around the world

Posted Feb 28th 2008 6:09PM by Joseph Lazzaro
Filed under: Commodities, Oil, Agriculture, Stocks to Buy

The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth an evaluation is OceanFreight.

OceanFreight Inc. (Nasdaq: OCNF) specializes in dry bulk carrier lease charters. Third parties use OceanFreight's dry bulk vessels to carry iron ore, coal, grain, and etc.

OCNF operates a 10-vessel fleet, primarily dry bulk containers, but the company also owns oil tankers. Overall capacity is about 1 million deadweight tons.

Further, the secular, global trend of increased international trade between the Americas and Asia hemispheres bodes well for OCNF. Moreover, OCNF is one of those "off the radar" companies worthy of investor consideration: light institutional coverage gives individual investors a chance to establish a position in a promising company, before the major buy-side institutions drive up OCNF's price. The Reuters FY 2008/FY 2009 EPS consensus estimates for OCNF are $2.78/$2.63

The risks? A global economic slowdown or a substantial reduction in intercontinental trade would (obviously) hurt OCNF's results. Analysts are also keeping an eye on the company's fleet age, fleet replacement schedule, and expansion plans.

Stock Analysis: OceanFreight is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from OCNF's shares. Sell/Stop Loss if you were to purchase shares in this company: $13.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: commodities, dry bulk carriers, emerging markets, OceanFreight, OCNF, shipping