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. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  2. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  3. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  4. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  5. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  6. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  7. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  8. Investing

    A Look at 6 Leading Female Value Investors

    In an industry still largely predominated by men, we look at 6 leading female value investors working today.
  9. Term

    What Is Financial Performance?

    Financial performance measures a firm’s ability to generate profits through the use of its assets.
  10. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  1. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  2. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>

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!