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Paragon Shipping: Still Floating

|Includes:Paragon Shipping Inc. (PRGNF)

Paragon Shipping (PRGN) is sailing under-the-radar for a company with significant value.  Even though it is in the headwinds of a) The Baltic Dry Index b) large number of new ship supply entering the business  3) lousy industry, the company stock price is positioned in a value-investor's sweet spot. 

1.  At  today's price, the company is paying a 5.86% dividend.  Take  it

2.  The dividend payout ratio is a safe 32%.  Better than some dividend aristocrats.  Forward 12 payout ratio is just above 50%, but still provides some margin of safety.

3.  The P/E ratio of both trailing 12 and forward 12 estimate is about 6 and 10, respectively.

4.  Price / Book is 33%.

5.  The stock is close to its 12-month low of $3.36 on 12/21/10.

6.  The company has a majority of its fleet signed to fixed-rate charters for the intermediate future.   

7.  This is a big-one for me:  You are actually buying something.  They have huge ships carrying cargoes everyday.  You can touch, see, stand on, and understand the asset side of the balance sheet.   

8.  A good way to make money is to buy what is "neglected" or "out of favor."

There are always reasons NOT to like a stock.  However, with this case you get value, a presumably safe dividend, some locked in rate/charter stability, and upside for the future.  Where else are you going to get a 5-6% return with potential for 100-200% price appreciation in the coming years?  Show me the investment, and I'll buy it.

Disclosure:  Long PRGN 

Investors should always do their own analysis and come to their own conclusions before purchasing a stock or making an investment

Disclosure: I am long PRGN.

Stocks: PRGNF