I pride myself on being a contrarian investor. However, my latest find is even far out on the contrarian scale for me. It is in a lousy industry (airlines) and is headquartered in one of the PIIGS (Ireland) as well. However, it is a strong operator with a growing portfolio of assets. It also pays a substantial and growing dividend yield and is selling at cheap valuations.
"Fly Leasing Limited (FLY) acquires, finances, leases, and sells commercial jet aircraft worldwide. The company leases its aircraft under long-term to medium-term contracts to a group of airlines. As of December 31, 2011, its aircraft portfolio consisted of 109 commercial jet aircraft with 103 narrow-body passenger aircraft and 6 wide-body passenger aircraft." (Business description from Yahoo Finance)
5 reasons FLY is a nice income portfolio pick up at $12 a share:
- The stock yields 6.6%, has paid a dividend every quarter since it went public in 2007, and just increased its quarterly payout by 10%.
- Consensus earnings estimates for FY2012 and FY2013 have risen over the past two months. Estimates for FY2012 have increased 40% in the past sixty days.
- The company crushed earnings estimates the past two quarters and is selling for less than 7 times forward earnings.
- FLY is cheap at just 66% of book value, increased its cash on its books by $28mm in the last quarters and added substantially to its airline portfolio with a cheap acquisition of 49 airplanes on attractive terms in late 2011.
- The five analysts that cover the stock have a median price target of $16 on the shares and Maxim Group just initiated a "Buy" rating on FLY in late June.