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I've long admired investor and billionaire Sam Zell, and when he likes a company like American Commercial Lines Inc. (ACLI), I'm tempted to follow him. This company, which manufactures and operates barges, saw its price drop more than 8% when it announced its fourth-quarter results, but within a couple days ACLI had made back most of the difference, in large part because the results were good even if they didn't meet investor expectations.

According to the company's press release, profits were nearly four times as high as the fourth quarter of 2005, and revenues were up 18%. Results for the year were even better, with 2006 showing revenues up 32% and net income up 681% over 2005. So if the price tumbled because the results for the fourth quarter weren't exactly what was expected, it's no surprise that investors saw the dip as nothing more than a chance to get the stock at a discount, rather than as anything to worry about.

I think these strong results are only going to continue for the next year or two; ACLI has been able to raise rates on many of its customers, and its production division, Jeffboat, has contracts that will take it through 2008. Of course, if oil keeps going up in price, this could dampen profits. The business is known for being cyclical and highly competitive. But, luckily, barge shipping is much less reliant on fuel than other types of shipping, and ACLI's management has shown itself more than capable of maximizing profitability. But for now, I think this looks like yet another winner for the brilliant Sam Zell.

Type of stock: A barge manufacturer and operator with terrific profits and a bright outlook for the next year or two.

Price target: As of February 20, a split will take place, so I'd wait until then and buy soon after the split takes place. This stock doubled over the last year, and I think it' s going to go up as investors who'd been hesitating at $70 take advantage of the lowered stock price. I project that the stock could reach $80 by the end of 2007.

ACLI 1-yr chart

ACLI

Source: American Commercial Lines: Following the Leader