With the maritime shipping industry still navigating stormy waters, investors should not be quick to dismiss the entire industry. Doing so means treating Alexander and Baldwin (NYSE:ALEX) as one of the ordinary shipping stocks. However as one peels back the layers of this business, the last thing that comes to mind is ordinary.

IN PICTURES: 20 Tools For Building Up Your Portfolio

A Tale of Two Industries
Alexander and Baldwin is a business that operates in two industries that may arguably be the two most severely affected by the global recession: transportation and real estate. While that may be the case today, a closer look reveals a quality business with some extraordinarily valuable assets. In fact, ALEX managed to end 2009 with revenue of $1.4 billion and operating profit of $120 million generated from $2.38 billion in assets. This impressive result in one of the worst years in economic history is, ironically, due to the fact that ALEX benefits from both real estate and transportation. And the company's real estate is some of the most beautiful and prized on Earth. (For more, see Introduction To Fundamental Analysis)

ALEX is the 4th largest landholder in Hawaii with over 88,000 acres. The company develops upscale residential and commercial properties on the islands. Indeed, Hawaiian real estate is recovering from a deep decline, but we're talking about Hawaii not Detroit. In addition to development, ALEX has an agricultural division in Hawaii that produces the world renowned Maui and Kauai Coffee brands. In fact, nearly 60,000 acres, or 75%, of the company's Hawaiian land is devoted to agriculture, which in the long run has much stronger fundamentals than real estate at this moment. In addition, ALEX also owns prime commercial real estate on the mainland in places like California and Texas. (For more, see Add Some Real Estate To Your Portfolio)

All Aboard
ALEX is not just any shipping company. Rather, its the leading Jones Act container shipping company on the West Coast. The Jones Act is a US shipping law that demands that all US based shipping lanes be run by US built ships and US crew. In effect, this gives companies like ALEX protected access to its shipping routes. The only other two publicly traded names that have this distinction are Horizon Lines (NYSE:HRZ) and Trailer Bridge (NASDAQ:TRBR). Traditional maritime shipping companies like Excel Maritime (NYSE:EXM) and DryShips (NASDAQ:DRYS) can not ship goods directly between American routes.

Beyond the P/E
At 22 times forward earnings, ALEX is not bargain material. However, at the current share price of $34, the stock is at the same price it was nearly six years ago while assets have grown by over $620 million. Today, ALEX trades at 1.3 times book value but that is valuing many of its Hawaiian acres at a cost basis of $150 an acre. The company's debt to total capitalization ratio of 30% is far superior than that of Horizon Lines which has over $500 million in debt against a market cap of $155 million. Yet HRZ trades at 1.5 times book value.

Bottom Line
ALEX is a company with irreplaceable assets and businesses that will be around decade from now. It's a name worth watching very closely.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    Redefining the Stop-Loss

    Using Stop-losses for trading doesn’t mean ‘losing money’, but instead think about the money you'll start saving once you learn how they work.
  2. Fundamental Analysis

    10 Major Companies Tied to the Apple Supply Chain

    Apple has one of the best supply-chain models. Here are some of the top businesses involved, and the benefits and challenges for all.
  3. Term

    What are Non-GAAP Earnings?

    Non-GAAP earnings are a company’s earnings that are not reported according to Generally Accepted Accounting Principles.
  4. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI US 1000

    Find out about the PowerShares FTSE RAFI U.S. 1000 ETF, and explore detailed analysis of the fund that invests in undervalued stocks.
  5. Options & Futures

    Use Options to Hedge Against Iron Ore Downslide

    Using iron ore options is a way to take advantage of a current downslide in iron ore prices, whether for producers or traders.
  6. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  7. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  8. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  9. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  10. Technical Indicators

    4 Ways to Find a Penny Stock Worth Millions

    Thinking of trading in risky penny stocks? Use this checklist to find bargains, not scams.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!