Opinions
The Panic-Proof Portfolio (Stockchase Research)
Euroseas Ltd.
ESEA-Q
TOP PICK
Jul 23, 2024
Stock price when the opinion was issued
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ESEA is a Greece based owner and operator of 22 containerships for dry and refrigerated cargoes. The company has just chartered its fifth incremental cleaner fuel ship out or nine planned. It trades at 3x earnings, 1.0x book value and supports a 52% ROE. We like that cash reserves continue to grow, while debt is reduced and shares bought back. It pays a nice dividend, backed by a payout ratio under 20% of cash flow. We recommend setting a stop at $31, looking to achieve $49 -- upside potential of 28%. Yield 5.5%
(Analysts’ price target is $49.50)We reiterate this operator of 23 containerships as a TOP PICK. The company will add 2 more to its fleet of efficient vessels in 2025 and announced three are under new three year contracts. We like that cash reserves are growing, while debt is aggressively retired and shares bought back. It trades at 3x earnings, under book and supports a robust 43% ROE. The sizable dividend is backed by a payout ratio under 15% of cash flow. We recommend trailing up the stop (from $31) to $36 at this time, looking to achieve $61 -- upside potential of 42%. Yield 5.7%
(Analysts’ price target is $61.33)We reiterate this owner/operator of 20 container ships as a TOP PICK. The company announced construction of 2 LNG-ready ships and that 70% of the fleet is booked for 2025 -- ensuring steady revenues into the next year. We like that cash reserves are growing, while debt is retired. It trades at 3x earnings, under book value, and supports a 43% ROE. The good dividend is backed by a payout ratio under 15% of cash flow. We recommend keeping a tight stop at $36, looking to achieve $51 -- upside potential of 28%. Yield 5.6%
(Analysts’ price target is $61.67)Our PAST TOP PICK with ESEA has triggered its stop at $36. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 9%, when combined with our previous guidance.
We reiterate the Greece based container carrier owner and operator as a TOP PICK. New energy efficient vessels are receiving premium charter rates, while older vessels are being sold at sizable profits. We like that cash reserves are growing while shares are bought back and debt is retired. It trades at 3x earnings, under book value and supports a 44% ROE. The robust dividend yield is backed by a payout ratio under 15% of cash flow. We continue to recommend a stop at $31, looking to achieve $55 -- upside potential over 40%. Yield 6.2%
(Analysts’ price target is $55.00)