FreeSeas, Inc. (FREE)

This is a wonderful entry price. The debate about a world recession is still raging, but companies need to still sell their products to survive this challenging time. So if markets reduce their consumption of luxury items, the need for getting dry goods and staple-type products from point A to B will still be necessary. Shipping is going to survive and can adjust their pricing directly to the rising fuel prices. The extra bonus with FreeSeas is the high dividend they provide.

Another boat coming on line later this year..continuing to increase fleet size...Great divy...

undervalued

will out perform in the coming months.very sold foudation the company have.

FreeSeas is a dry bulk carrier currently operating with 5 ships. Through recent acquisitions, that number will be up to 8 in the next six months. But that’s not all that’s growing…

For the year just ended, FREE’s revenues were up 71.8% for 2007 as compared to ’06. The consensus estimate for sales in 2008 is hair under $63 million, up from 20.15 million in ’07. That’s some supercharged growth.

Unfortunately FREE was unable to produce a profit for 2007. However, the company has improved its balance sheet by paying off some loans and is expected to be profitable for the year.

The consensus estimate from the 2 analysts that cover FreeSeas is $1.07 per share for the current year. At that estimate, FREE trades at roughly 5 ½ times its forward earnings.

This is where the fun starts. The average P/E ratio of the 50 companies that make up the Dow Jones Marine Transportation Index is 12.89. At the average P/E, FREE shares would be valued at $13.79, a return of 132%.

Let’s go back to FreeSeas revenue expectations. At 63 million, FREE is currently trading at 1.5 times its projected sales. The average DJ Marine stock trades at 3.39 times sales. At the industry average, FREEs share price would be a little less sexy at $13.35 per share.

But wait, there is more… On February 7th, FREE announced a quarterly dividend of 17.5 cents per share. That totals up to 70 cents per year. At the current stock price, that’s a 14% yield. According to FreeSeas CEO, Ion Varouxakis, it is the company’s stated policy to continue paying that 17.5 cents every quarter in 2008. Try to find that at your local bank.

So even if all of our projections are wrong and the stock doesn’t move an penny in the next 12 months, you’ll make 14% on your money. How sweet is that?

But quite frankly, If FreeSeas meets its 200% growth target for the year ahead, a 13 P/E and a 3.39 price to sales ratio seems kind of low.

We would also expect such explosive growth to catch the eye of more than 2 analysts, meaning more exposure for FREE.

dear wordpicker,

company location: bermuda? greece? usa? with these shipping stocks its a little difficult to find the owner,

the owner is from where? they use a flag from what country?

a little confusing, now if things go wrong, where do i find the CEO to pay my respects and a little extra.

Will possibly double in one year
Also about 13% dividend yield

Come on now. Everything, I mean EVERYTHING is made in China. And God forbid, they are not going to keep all the lead-based painted toys for themselves. Enough said

Dry bulk shipping is going to be strong for the next couple of years due to a shortage of ships and an increase in the demand for them. China has doubled its need for iron which it gets from Brazil. China has also stopped shipping coal to North and South Korea and Japan and they are now getting there coal from Australia. The need for grain/raw materials in all emerging nations is also driving the need. Finally the shipbuilders are tied up with specialty orders and are not accepting anything new until 2009 which means that no new ships for this sector til late 2009 or 2010. FREE is down by over half of where it was at in October (this cycle was seen by most of the dry bulks) and should start going up around April. It should reach $10-$12 a share by the fall.

dryship

dry bulk shipping

This is a sector pick in dry bulks shipping. After racking up some welcome gains in DRYS, I went looking for a company in the same sector that had favorable fundamentals.

dryship

Past performance (exceptional growth)

High growth margin (67.1%)