TBSI

[nullzero]

TBSI-TBS International Limited provides ocean transportation of dry cargo through the use of owned and chartered vessels. Its liner, parcel, and bulk services primarily carry steel products, coal, salt, sugar, grain, fertilizers, chemicals, metal concentrates, and general cargo. The company provides short and long-term time charters that offer an alternative means to contract for ocean transportation of cargoes and make the carrying capacity of entire vessels available to its customers. It also offers parcel service that originates in Peru, Ecuador, or Chile and carries metal concentrates, beet pulp pellets, and fertilizers to East Asia. As of December 31, 2005, the company�s fleet totaled 37 vessels. As of the same date, it carried 3.2 million tons of cargo and operated 198 voyages. TBS operates in Brazil, Japan, Chile, the United States, Peru, United Arab Emirates, Venezuela, Korea, and China. The company was founded in 1993 and is based in Hamilton, Bermuda.

from yahoo finance

Market Cap (intraday): 288.33M
Enterprise Value (21-Feb-07)3: 378.34M
Trailing P/E (ttm, intraday): 8.45
Forward P/E (fye 31-Dec-07) 1: 6.75
PEG Ratio (5 yr expected): 0.74
Price/Sales (ttm): 1.09
Price/Book (mrq): 1.39
Average Volume (3 month)3: 47,029.5
Average Volume (10 day)3: 30,666.7
Shares Outstanding: 27.72M
Float: 9.90M

Fundamentals look good, nice trend in increasing revenues and earnings.
http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=tbsi

With free markets expanding and global trade expanding every day, TBSI is in a good industry with dry shipping of goods and materials across the world. The chart looks good (the volume is a little on the lower side 40k daily avg. but looks like its stepping up) and the fundamentals are undervalued compared to the rest of its peers in the shipping industry. Dry shipping seems to be one of the gem sectors with China, India, and the world consuming more raw materials and goods. BULK, DSX, and other peers in the industry have been reporting excellent earnings results the last couple quarters.

[nullzero]

Bought some TBSI @ 10.65 avg today. Earnings out march 9th hoping for some good numbers  .

[nullzero]

Chart is looking great making new 52wk highs, waiting for more volume to kick in to take this higher  . I am expecting closer we get to earnings march 9th is when the volume will start ramping up.

[nullzero]

Should of held in .

[David Randolph]

At EXM's thread we've been discussing shipping companies and TBSI popped up as the most attractive of the all, despite being up so much over the short term. The stock is trading at 7 times estimated 2008 earnings, and the Shipping industry average trades at 15.76 times earnings.

If analyst's estimates are met and the company trades at the industry average valuation, it will rise 125% between now and the end of 2008, that is a 50% annual return.

My valuation model for the next three years looks like this:



The rise in profits is expected to come mainly from an expansion in net profit margin to the industry average level, but also due to revenue growth of 11% (which was the Q1 2007 growth rate).

I wish I bought the stock earlier, but it is still very attractive in my view, with a 40 - 50% expected share price CAGR from this point. I expect TBSI to more than offset EXM's short term decline, no doubt TBSI is more attractive than EXM, it has more vessels (34 against 17 for EXM), more revenues ($70.8 M in Q1 versus $36 M for EXM) and just $630 M market cap versus $509 M for EXM.

The trading plan is:

Buy TBSI, 6.66% of capital as always.

[yukiii]

Good Choice target $30

[David Randolph]

Good Choice target $30

Thanks yukiii

TBSI trade looks like NGA's, a stock that is up a lot over the short term, but where the fundamental value is obviously superior. I hope the outcome will be similar too.

Not considering growth or anything else, if we multiply the $0.51 EPS the company had in Q1 2007 by four, we get to $2.04 EPS for the full year. If we apply the Shipping industry average earnings multiple of ... hmmm, it declined from 15.76 yesterday to 11.89 today ... can't be, something is wrong, like it happened with the Networking & Communication Devices industry once while I was covering SILC. I'll make the same thinking tomorrow, waiting for the data error to be corrected.

Well, let me check the P/E of the three largest Shipping companies (also multiplying the 1st quarter number by 4), which are TK, TDW and FRO.

- TK had EPS of $0.81 in Q1 2007. Gives me $3.24 for the full year. Stock is at $60.26, forward P/E is 18.6;
- TDW had EPS of $1.56 in Q1 2007, which translates into $6.24 for a full year. Yesterday's close was $66.4, P/E is 10.6;
- FRO ... still didn't report.

Not many conclusions from this study either.

Well, according to analysts views TBSI is trading at 7 times 2008 earnings, so it wouldn't surprise anybody to see this number rise at least 50%, to 11.5 times forward earnings:



I'll keep on holding TBSI.

[stockhunter]

Hi,

I'm new to 3sof and just started recently following.

Bought TBSI yesterday and it's taken a nice hit today    Do you usually see some corrections before the stocks pick up with your pics?

[David Randolph]

Hi,

I'm new to 3sof and just started recently following.

Bought TBSI yesterday and it's taken a nice hit today    Do you usually see some corrections before the stocks pick up with your pics?

Yes, I would consider the first 10%, up or down, as "short term noise". TBSI was overbought so people are taking profits in it. Unfortunately it is impossible to know when corrections will come and when they will end, it's unpredictable. One should rely on the trend (which is obviously ascending), and the fundamentals (which are obviously attractive - that's why the stock has been up so much - but it is still way undervalued).

[stockhunter]

How do you tell it's overbought.  Does 3SOF have such a huge following that whatever it puts out causing things to be overbought? 

The last several recommendations seem to be all negative thus far (probably not enough time).

Forgive me if i appear negative, it's clearly not the case, just trying to look at things critically & without emotions as stocks dont' have any

[wxmang]

David,

Shouldn't we have stop limits in place for stocks in the portfolio like TBSI in case of a stock market correction? I understand that you believe in long term fundamentals, but the market sometimes doesn't care about that, especially when they are unloading everything and the kitchen sink... 10% loss can turn into 20% and so on very quickly.

[David Randolph]

How do you tell it's overbought.

Technical indicators tell you that, for example, the Stochastic Oscillator and the Relative Strength Index (RSI):



When the SO is above 80, or the RSI is above 70, the stock is overbought. I've learned this when I was studying the market for one month, back in 1996. Of course, these indicators are worthless, look, if you had sold because it was overbought, you would have gotten out of the stock at $12 or so.

Does 3SOF have such a huge following that whatever it puts out causing things to be overbought?

Not at all.

The last several recommendations seem to be all negative thus far (probably not enough time).

Yes, it has been a though time. The Main Portfolio declined from an all time high of $425,000 to $391,670 now, a 7.1% decline from top to bottom (drawdown). If you pick any mutual fund you like, any, over a number of years, you'll see that there's not even one that could escape a 7% drawdown. I feel the pain like everybody else, but I believe the Main is at the lows of this correction, and the long term trend remains bullish.

Forgive me if i appear negative, it's clearly not the case, just trying to look at things critically & without emotions as stocks dont' have any

That's the right course of action, keep things in perspective.

David,

Shouldn't we have stop limits in place for stocks in the portfolio like TBSI in case of a stock market correction? I understand that you believe in long term fundamentals, but the market sometimes doesn't care about that, especially when they are unloading everything and the kitchen sink... 10% loss can turn into 20% and so on very quickly.

No, it doesn't work, one ends up selling at or near the bottom, I've tried that in the past. Everyone is free to do as he thinks is best, but my advice after taking so many costly lessons is for you to sit tight and hold everything you got with strong hands.

[yukiii]

Its time to buy, after 2 down days we will go back up, not Davids fault we had a correction.

[wxmang]

"Its time to buy, after 2 down days we will go back up, not Davids fault we had a correction."

The time to buy is when the short-term downtrend stops.

I am training my mind to smile at the 7% losses on the year that I have

I think it is working, because, I haven't thrown the computer out the window like I did in the DOT COM days

[yukiii]

 As long as the Nasdaq can hold support at 2533 then the rally from the mid March low will remain intact.  However if the Nasdaq were to break below 2533  then that would lead to a drop back to 2500 which would signal a reversal of its current up trend.