“Best of Gulf Oil and Shipping” Bulletin Board Elite

By Travis Johnson, Stock Gumshoe, April 18, 2008

Here we have another one from Greg “Gunner” Guenthner and his Bulletin Board Elite service … the email actually went out for the first time a few months ago, but the stock hasn’t really moved much since, so perhaps it’s worth a look.

Guenthner has teased a few stocks that we’ve looked at before, including the very successful Ener1 and the so far unchanged Western Geopower which, for those who were afraid they had missed the geothermal run, is just about exactly where it was when he teased it last July.

So, I guess we’ll have to judge this one on its own merits — always a good idea.

This is again a “Company X” teaser, though of course it’s much different than the last “Company X” teaser I wrote about (that was the abysmal Clearwire). Company X in this case is a firm that operates Gulf Coast shipyards and builds and repairs ships and other vessels. Sexy, huh?

So, what do we learn about this little “company x”?

It is “at heart, a small family company that builds and repairs steel and aluminum marine vessels.”

They make “modular components of offshore drilling rigs” and various other oil service vessels.

The company is split into two separate segments, both of which are profitable: construction of vessels, and repair and conversions of same.

“While the shipbuilding side of the business operates on land at the company’s facilities, the repair business is mobile. Most repairs are made on floating dry docks or the ships themselves.”

“Gunner” says that the stock remains “virtually undiscovered”, has an “extemely low” price to earnings ratio, and trades for less than annual sales. In his words, “it’s still trading at dead sea prices as the new Gulf boom is beginning to take shape.”

So … into the hopper it all goes. The Mighty Thinkolator churns and churns. Coughs. Sputters.

And answers,

this is, in all likelihood, Conrad Industries (CNRD on the pink sheets)

Actually, this one piques my interest a little.

Conrad industries is indeed a family-founded company, lightly traded, that runs shipyards in Louisiana and Texas, and provides all the repair and conversion services as teased.

The PE is very low, if we go on 2007 results — the earnings were 2.63 per share, and the share price is currently a hair over $12. So that’s a trailing PE of about 4.5. The market cap is about $88 million, and they recently authorized a share repurchase plan of $10 million, so that might serve as a bit of a backstop to the share price.

The shares have certainly fallen this year, though — they also looked cheap in late December when this teaser first circulated, at around $15, but that didn’t stop the shares from falling a further 20% … so I have no idea whether this is it for the haircut or not. The shares did spike as high as $18 last last fall.

This is a thinly traded pink sheet stock, but — and this i