Cheap Stocks to Buy Now – Great Lakes Dredge & Dock (GLDD)
Price as of 8/14/14: $7.42
Great Lakes Dredge & Dock (GLDD) is another rather boring, cyclical company that hasn’t gotten a lot of love over the past few years.
For those unfamiliar with the process, dredging involves underwater excavation. Typically this involves either deepening shipping lanes to facilitate travel, or moving sand in beach replenishment efforts to protect against erosion. Great Lakes serves not just its namesake region, but also the East Coast, West Coast and Gulf of Mexico regions.
Now, GLDD has had a rough go since its initial rebound during the 2009 snapback. Since early 2012, the stock is up about 30% to deliver only half the profits of the broader market. Furthermore, GLDD cancelled its dividend in 2012 and burned a lot of long-time investors.
Great Lakes has had trouble staying above $9 for long, and last year the stock saw trouble as earnings releases kept getting pushed back — culminated at last by a restatement of two quarters of results this spring, and the resignation of the current COO and former CFO Bruce Biemeck as a result. It’s always hard to trust a company that has fishy accounting practices, and Wall Street hasn’t been kind to been brutal to GLDD stock since April as a result.
However, the company is indeed profitable … and while it’s trading for a pretty rich 16 times future earnings, Wall Street could very well be lowballing those targets because of past accounting transgressions.
It’s a risky play, to be sure. But what with increased industrial and manufacturing business in the U.S., shipping lanes are increasingly important and governments are finally seeing a recovery in their tax base to allow dredging projects to take place — particularly now that America can export crude oil.
GLDD is a cyclical play, with a black eye from recent accounting troubles. But hey, cheap stocks are cheap for a reason … and this pick might be worth a flyer after its fall from grace.