Stock Investments
Great Lakes Dredge & Dock GLDD is a Hidden Gem That’s Cheap!
Great Lakes Dredge & Dock Corp is a very successful industrial cyclical company with a micro cap stock that appears distressed and undervalued. It is cheap, features a dividend and is firmly based in the United States with strong international exposure. Let’s take a look and see why we should add GLDD to our portfolio.
Great Lakes Dredge & Dock Corp was incorporated in Illinois in 1890. Although the name would imply the company is only working in the Great Lakes their original market has expanded throughout the United States. In fact they are the largest dredging service provider in the United States and the only one with a respectable international exposure.
Dredging allows canals like this one to be in proper working order. Notice the build up of sediments and trash. Great Lakes Dredge & Dock eliminates this problem by removing this build up.
What is dredging? And what does Great Lakes Dredge & Dock do?
Dredging involves using very expensive excavation machinery to make space in waterways for cargo freights but also for the build up of locations along waterways lost to erosion. The core of Great Lakes Dredge & Dock business is in dredging but they also see a fair amount of work in saving shoreline and ecosystems. Just recently they signed a $57 million dollar contract with the Bahrain Government to reclaim 618 acres off the Gulf coast of which housing will be built on. Interestingly GLDD also has an intensive business in demolition services.
Why do I like Great Lakes Dredge & Dock?
The first thing that caught my attention of why I like Great Lakes Dredge & Dock is its cheap price, hovering around $6 a share. An industrial stock like this available at this price is phenomenal. A company that has positive cash flow, a dividend and is a hallmark that has been around since the 19th century is a great stock for a beginning investor. I also like GLDD because it is familiar to me. Growing up in the Midwest I have seen these machines in action and I know the importance of dredging in the Great Lakes. Seth Jayson from the Motley Fool likes GLDD because it fits under his fast cash machine standards.
Dredge Equipment can be rather small or large. Almost all dredge boats require the use of a crane.
What are the Risks of Great Lakes Dredge & Dock?
Great Lakes Dredge & Dock looks pretty impressive but why such a cheap price and why is no one else excited about investing in it. I suspect investors and analysts worry about the expensive cost in dredging and the equipment that it requires. They are also not so optimistic of growth as I might be. Another thing to keep an eye on is its contracts, most of which are tied to military expenditures in the Army Corps of Engineers. With foreseeable cuts in military budgets this could have a dramatic impact on the business for GLDD.
Bottom Line?
I like Great Lakes Dredge & Dock a lot. It is a historically impressive company with a virtual monopoly on the work it does, mostly dredging. This is one of those great company’s that analysts are not paying attention to. They are profitable and provide a service that is a virtual necessity, one that will likely increase. Do some research on this one and let me know what you think.
Tagged Dredge, GLDD, Great Lakes Dredge & Dock, Industrial, micro cap
