Safe Bulkers (NYSE:SB)

Zacks Rank 4-Sell, Recommend Neutral, Industry Rank 167 / 217, Target 7.50, Avg Target of 4 analysts 9.17

I think moving forward with the global economy on an uptick, despite the EU, this company is well situated to take advantage of all the natural resources China is going to need. As well as the amount of grain these guys ship, I mean the world has to eat right? Look for these guys to start picking up steam in the year ahead.

(Opened a $7,000 position. Long.)

http://www.imdb.com/name/nm2563717/

Current dividend payout ration, according to dividendinvestor.com, is only 41%. That seems pretty astounding, considering the (now 10%) dividend in the face of being battered over the course of 2011. It probably won't rebound without a larger economic rebound, but it would seem to defy logic for it to fall too much further. Go ahead, stock market. Prove me wrong--I know you enjoy it.

This stock is incredibly cheap right now. I believe it has been strongly oversold this year. The dividend has been consistent, and is quite high right now. Short interest in the stock is the lowest it has been, and is quite low for this sector. (I've been bitten twice by ignoring this. Can any one say FSLR and GMCR???) As of today, it is running around 9.5% dividend. I believe there is strong potential for upside. I'm opening a small $2K position today, since the entire market is down, and am going long.

Seems to be an undervalued pick in a battered industry. 60% insider holdings.

A shipper in this economy......no wonder those guys with the white jackets have been following me around lately.....

Safe Bulkers just can't get any traction the last month. The Share Price bounced off the $7 bottom for a nice 12% recover in early July only to drift back down again. Earnings were not kind to Safe Bulkers and the market dumped again this past Friday (7/22/11). In my own opinion, any earnings that cover expenses and dividends in this erratic shipping market are to be commended. The drybulk index has been extremely erratic and is also bouncing off a recent bottom that borders on unprofitability for even the leanest shippers. Safe Bulkers adds more confusion to valuation as it prepares to receive new ships over the next two years. The market is aware of the glut of ships in play and those on order. Many older ships have been scrapped and many orders cancelled, but the supply demand still favors the company's needing their goods shipped.

I think Safe Bulkers is a safe play and could be a profitable one over the next two years. They have a history of longer term charters that work out well for themwhen the day rate is depressed, although it may cap their profits when day rates spike. Safe Bulkers claims to have additional financing, funds from a recent stock offering and other funds to bring the new ships online without furhter dilution to current holders. While that remains to be seen they are still paying out the $0.15 quarterly dividend that now works out to an 8% dividend. I'm careful assuming on dividend payout on shippers. Many have cut their dividend or stopped it completely. Some pay dividends by issuing new shares which is not productive to shareholders in the long run. The P/E fluctuates, but at the worse points is still around 7.

The 16 current ships have an average age of only 4.4 years and leasers favor newer ships. Some of the 11 new ships expected betwen now and 2014 are already contracted. If Safe Bulkers can fund the new ships, keep contracts foward of 70% plus and take advantage of erratic day rates on the other 30% then Safe Bulkers could easily double over the next two years if the economy stabilizes and improves only slightly. Safe Bulkers came into the field at a time when dayrates were already starting to decline and have maximized their equity over the period. Using current ship value as cushion is dangerous since a decline in the economy will cause ship prices to drop rapidly, but overall Safe Bulkers appears to me to be about as "SAFE" as a play in this industry can be.

Shipping will pick-up within a year. New ships coming on-line creates economic savings. Solid customer base.

commodities are up and shipping rates will rise as well...

Looks primed for $12 to $15 in a few years

reaction to global demand

check out article on seeking alpha site by a young but apparently very smart broker http://seekingalpha.com/article/236702-safe-bulkers-still-looks-good-after-3q-earnings?source=qp_article

lowpricevaluestocks15

Good growth and earnings.

Safe Bulkers qualifies for my best 12 low price value stocks screen, which looks for low PE's, high roes, low p/bv and reasonable price trends. Balance sheet seems solvent. Management looks savvy based on its success navigating the recent weakness in the shipping industry. Forward P/E is 5.

I'm expecting an eventualy turn around in the dry bulk sector. Even if shipping prices don't improve over the next few years (which I expect they will, even with the increased supply) I imagine that the low earnings multiples many of the these companies trade at will still make them worthwhile investments. Given that the outlook for this industry is so uncertain though you will probably want to stay away from any of the heavily indebted shippers (the one I'm most familiar with is Excel Maritime...I used to own it before dropping it in favor of Safe Bulkers).

Considering Safe Bulkers in particular: it's earnings have falled from last year when there was the big uptick in shipping prices as they recoverd but have come down a bit along with the rates. They are still trading at attractive multiples though, have enough cash flow to cover their 7.6% dividend, and have no debt. The no debt is the most important part given the uncertainity of future cash flows that faces the industry. That also gives these guys a huge advantage in the case of hardship down the line because they will be able to take advantage of attractive acquisitions if necessary.

I think that Safe Bulkers is well positioned to continue operating as is and even in an environment that is worse than the one we are in right now. The downside is limited because of their continued ability to bring in income and pay their dividend and the upside is huge if shipping rates recover over the next few years.

Good bet for dry shipper with excellent dividend that survived when others stopped paying.

commodities coming back - shipping market will profit.

low PE /PEG (speculating)

CS PT: $12
Reuters Outperform

Fleet expansion / orders of new vessels from China.