EuroDry

Freight rates for the mid sized vessels EuroDry operates have risen sharply, and the company just delivered its strongest quarter in four years. About 15 cents of every revenue dollar reaches the bottom line, and the shares trade at roughly 15 times earnings, which is a modest price for that level of profitability.

Much of the recent boom has been converted into hard assets and contracted future earnings rather than simply spent. In shipping, the fleet itself holds real resale value, which puts a floor under the company that a typical business does not have. Eleven vessels is a meaningful fleet for a company this small.

Despite the strong quarter, revenue over the past year fell 14.4 percent. The recent share price gain has been driven by a spike in freight rates and a cheap starting valuation, not by the business getting bigger. That is an important distinction and it is the main risk here.

At roughly 141 million dollars this is by far the smallest company on the list, small enough that the share price can move sharply on modest trading. Shipping is also one of the most brutally cyclical industries there is. Freight rates can halve within months, and the vessel classes EuroDry runs have heavy order books of new ships being built.