I am retired and take educated guesses on all things financial.

January 07, 2010

January 8, 2010: Excavating A Winner: Great Lakes Dredge And Dock

What is a dredging and demolition business doing headquartered in upscale Oak Brook, Illinois? The only thing that needs dredging and demolition in that locale are some worn out restaurants and a permanent fix for the pot holes and traffic stagnation off Cermak, Wolf and Butterfield Roads. The Kingery, too, as it spurts and stops to the frustration of commuters anxious to get home to their apartment,bungalows or mansions ringing the area.

Great Lakes Dredge and Dock has a fascinating history dating from 1890, when it moved the City of Chicago water supply intakes farther into Lake Michigan to avoid the highly contaminated waters close to shore. It dredged the land where the Museum of Science and Industry now stands off Lake Shore Drive, and much more.

GLDD, trading at $6.92/share, appears poised to be the right business at the right time with a global presence in marine construction, dredging, and commercial and industrial demolition. Great Lakes Dredge and Dock provides service enhancements and/or preservation of waterways and shorelines. This company replenishes and restores beaches on the perimeters of both salt and fresh water.The dredging part of the business has foreign and domestic operations, working for general contractors, corporations, non-profits such as hospitals and universities,and governmental bodies. GLDD is fully certified with its over 218 marine assets to restore wetlands, harbors, shipping channels and mitigate storm damage caused by events such as hurricanes. This company, while true to its roots, is morphing into areas which are deemed environmentally vital in addition to their over century-old core businesses. Twety-five per cent of GLDD's operations are overseas, with most in the Middle East.

Great Lakes Dredge and Dock is a $405m company. The average share volume for a recent ten day period was approximately 325,000. GLDD yields 1%. One analyst estimates company growth at over 50% over the next five years. I do not see excessive competition for the services it provides.

I do not see a significant downside to this security. The upside potential warrants a close look. Examining the company's history is a worthwhile exercise in itself.


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