Algoma Central Corp. (ALC-T)

It is a shipper. It is a tough business. You often end up with empty ships doing a ‘dry’ run. This one has been rather consistent, but their return on capital is usually 5%, and is down to 2% right now. A year ago it was down to 1%. He likes improving return on capital. If it gets back to 5%, the stock would be worth about $20. We need to see that improvement. There is a small amount of evidence that the return on capital is improving.

A very well-run company. It ships goods across the Great Lakes and owns assets in ocean shipping. This is now trading below BV. A cyclical business. It could easily recover if the Canadian economy starts to improve. If you are looking for value, he wouldn’t hesitate to Buy. The company is doing all the right things. They are keeping their costs under control and using their balance sheet to improve their ships.

(A Top Pick Dec 1/14. Down 5.23%.) A small company that runs shipping vessels in the Great Lakes and also owns a share in an ocean shipping Company. The big news on this is that they have announced they are looking to sell their real estate, and he thinks there is an embedded value of $5 a share, and doesn’t think this is reflected in the stock price. He can see upside well into the $20-$25 range.

Probably economy sensitive and is in the transportation sector, so it should be okay. Chart shows a long-term trend line and it is still in an uptrend.

(A Top Pick Aug 21/14. Down 2.57%.) The great shipping line on the Great Lakes. A very sensible long-term Hold. Pays a small dividend. If you own, continue to Hold.

(A Top Pick Aug 21/14. Up 11.09%.) This is a great fleet of commercial ships on the Great Lakes. Clearly one of those good stocks in safe waters in the current market. Pays a dividend. A good safe haven.

Infrastructure is very important and these are long life assets. Shipping is never going to go away and they have ordered a bunch of new ships. Just reported their 4^th quarter. Thinks normalized earnings for 2014 were about $1.20 a share and he is looking for $1.30-$1.40 a share in 2015. This is dirt cheap.

They will have spent $500 million by 2016 replacing their ship vessels and are going to have one of the youngest fleets in the world. This company is going to have better ships, more fuel efficient and will be able to load faster. He sees earnings, probably by the end of next year, getting up to a normalized $1.50 a share. You are only paying 10-11 times earnings. Also, have other assets that they can unlock, including about $100 million of real estate. Yield of 1.74%.

Greatest tanker fleet and in shipping of all the commodities. A good dividend. It has downtime in the winter. They might get to a higher level shortly due to a partial fleet modernization.

Moves ships across the Great Lakes. The problem is, it is so cold it is going to be a late start to the season. Didn’t have a good 2013. Management was disappointed in how things went. Lousy start to 2014. Ships should be moving stuff already but they can’t. Assets are terrific. They are improving all the ships. Moving all the right products, grain, iron ore, salt, etc. A wonderful business that you can’t duplicate. Continues to buy this for new clients. Waiting for a bad quarter, and if that happens he will be buying a lot more. Yield of 1.8%.

Essentially a monopoly shipper on the Great Lakes. They ship a lot of dry goods. One of their big products is salt. Feels the stock can earn somewhere in the $1.20-$1.50 range this year and next. Trading at around 10X earnings and close to Book Value. Have modernized their fleets. This is a wonderful investment and would buy below $15.

The biggest operator of bulk carriers on the St. Lawrence Seaway. This is a small cap underfollowed by analysts and, therefore a little bit illiquid and you have to be careful. Balance sheet is okay. Recently bought some more ships and of course that raised some debt. Stock has performed very well. Expect earnings per share growth this year will be probably 11%-12%. Very solid business.

Ordered new ships and have got them. Having a fight with a former shipbuilder who didn’t deliver the ships on time and are hoping to get some cash from that. A monopoly player on the Great Lakes with iron ore, grains, coal and heavy stuff. He loves monopoly businesses and businesses that have growth into the US. Trading at a reasonable valuation compared to the railroads. Thinks it will earn $1.25-$1.30 this year, which is about 10-11 times earnings. Also, have some real estate. Thinks this is a double over the next 5 years.