Shipping companies have been decimated—or worse—during this global economic recession, but as some regions turn the corner and begin economic recovery, select shippers will be in great position to reward patient investors, writes Mark Skousen of High-Income Alert.

Seaspan (SSW) is one of the world’s leading charter owners of container ships. Virtually all of the company’s vessels are leased at long-term fixed-rates.

Today, Seaspan has a fleet of 72 vessels, with seven more scheduled for delivery through 2014. All seven container ships already are committed to fixed-rate time charters with durations of between ten and 12 years from delivery.

Seaspan’s customer base consists of nine of the world’s largest liner companies, including China Shipping, COSCO Container Lines, Compania Sud Americana de Vapores, Hanjin Shipping, MSC Mediterranean Shipping, and United Arab Shipping.

Seaspan will keep growing aggressively to feed the booming transoceanic trade between Asia, Europe, and North America. The company plans to keep purchasing new container ships every year for the next several years.

Growth in earnings per share is about to accelerate for two primary reasons:

  • 90% of its revenue comes from China. Even during this period of global economic weakness, millions are joining the ranks of the middle class there each year.
  • Secondly, Seaspan secures long-term contracts with customers before it orders new ships. That has allowed it to weather the economic contraction of the past few years. Seaspan also does a thorough credit analysis on customers to minimize defaults.

Then there are the numbers. Quarterly revenue—thanks to its growing fleet—rose 39% last quarter. Operating margins top 48%. And insiders own nearly a quarter of the outstanding shares.

Seaspan currently pays a 5% dividend. And this yield may double in the year ahead. Why? Because earnings could jump almost 70%, to $1.70 a share—thanks to new vessels and rising commercial activity in Asia.

In sum, this is a high quality, high-yielding play on China’s import and export markets. Expect good news when Seaspan makes its next quarterly earnings announcement on March 12.

Subscribe to High-Income Alert here..

Related Reading:

Shocking Exclusive! Europe Screws Up Again

What Happens If Greece Goes Bust

Will China Surpass the US as the World's #1 Superpower?

Related Articles
  1. 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.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Fractal Markets Hypothesis (FMH)

    An alternative investment theory to Efficient Market Hypothesis ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  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 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 >>
  3. 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 >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
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!