These Stocks Might Ship Your Portfolio to the Next Level: CAI International Inc (CAP), TAL International Group, Inc. (TAL), Seaspan Corporation (SSW)

Container transport for a shot of diversity

A stock near and dear to my heart is Seaspan Corporation (NYSE:SSW) with a fantastic dividend yield of 5%, and a commitment to increase that when possible. It just increased the 1Q2013 dividend to 0.3125. Seaspan owns the huge ships that intermodal containers are transported on. These ships are contracted out on charters that can vary in length of time. Seaspan Corporation (NYSE:SSW) has traditionally tried for longer-term contracts, which helped them get through the decline in global shipping.

Seaspan is a company with a high PE of around 74, but its history shows that it tends to have a higher PE. It also expands its fleet regularly, which accounts for its large debt load. The company’s debt is not a concern if it can keep its ships plying the seas and make money. The latest earnings call said that while it continues to have charter contracts, the pricing environment remains weak.

With the return to profitability, the company has seen its price rise from the $15 area to the current $20. For 2013, the company expects container trade growth to increase 7% overall, which should keep Seaspan’s ships a little busier than in 2012. There was no guidance regarding price trends. Lower Asia-Europe trade was cited as a reason for some of the weakness in 4Q2012. An increase in trade volumes should help the company, especially with it planning on taking delivery of more ships.

Concluding thoughts

CAI and Seaspan Corporation (NYSE:SSW) seem like a great combination for an exposure to shipping. CAI provides the containers, while Seaspan provides the shipping. Since CAI trades slightly below its peers despite having great numbers, it gives you the best chance for near-term gains. Seaspan Corporation (NYSE:SSW) is a perrenial favorite of mine, and recent results were a bit soft. That could present a nice opening for anyone who wants to go long, as 2013 seems like it will be a better year. In general, the global economy is improving and all three companies should see a benefit.

The article These Stocks Might Ship Your Portfolio to the Next Level originally appeared on Fool.com and is written by  Nihar Patel.

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