Cheap Value Stock Alert: 1 Stable Business to Buy Today

Geographical diversification combined with the inexpensive valuation of Algoma Central Corporation (TSX:ALC) should serve long-term shareholders well.

| More on:
Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Algoma Central (TSX:ALC) owns and operates the largest fleet of dry and liquid bulk carriers operating on the Great Lakes-St. Lawrence Waterway, including self-unloading dry-bulk carriers, gearless dry-bulk carriers and product tankers. Algoma also owns ocean-going self-unloading dry-bulk vessels operating in international markets and a 50% interest in several global joint ventures, which include a diversified portfolio of dry-bulk fleets operating internationally.

In addition to the company’s owned vessels, Algoma also provides operational management for four vessels. The company’s executive offices are located in St. Catharines, Ontario. Algoma employs approximately 1,600 people globally with assets of $1.2 billion and annual revenues of $545 million.

Diverse business segments

The company’s largest segment is the domestic dry-bulk segment, which includes the company’s Canadian dry-bulk carriers. This segment serves a wide variety of major industrial sectors, including iron and steel producers, aggregate producers, cement and building material producers, salt producers and agricultural product distributors. Algoma’s customer base includes leading organizations in each market sector, and its service relationships are typically long term in nature.

The company’s product tanker fleet provides safe and reliable transportation of liquid petroleum products throughout the Great Lakes, St. Lawrence Waterway and Atlantic Canada regions. This business unit consists of eight product tankers employed in Canadian flag service. Domestic customers include major oil refiners, leading wholesale distributors and large consumers of petroleum products who demand the highest levels of quality and service.

The investment properties segment consists of a shopping centre located in Sault Ste. Marie, Ontario. The corporate segment consists of the company’s head office expenditures, third-party management services and other administrative functions of Algoma.

Value-added services

The principal services provided by the company include domestic dry-bulk consisting of Canadian flagged dry-bulk vessels and ship management services. The dry-bulk vessels operate within the Great Lakes, St. Lawrence Waterway, and Atlantic Canada. The vessels are designed to carry a variety of dry-bulk products including iron ore, grain, coal and coke, salt and aggregates. Product tankers consist of Canadian flagged vessels which operate within Atlantic Canada. Customers include major oil refiners, leading wholesale distributors and large consumers of petroleum products.

Ocean self-unloaders consist of direct ownership of dry-bulk, self-unloading vessels and interests in other self-unloaders that trade worldwide. Global short sea shipping consists of three global fleets; a fleet of specialized cement carriers, a fleet of short sea mini bulkers and a fleet of bulkers. In addition to these principal businesses, the company owns a shopping centre located in Sault Ste. Marie, Ontario.


The nature of the company’s business is such that the earnings in the first quarter of each year are not indicative of the results for the other quarters of the year. Due to the closing of the canal system and the winter weather conditions on the waterway, the majority of the domestic dry-bulk fleet does not operate for most of the first quarter.

The company has interests which carry on most operations in foreign jurisdictions. This geographical diversification combined with the stock’s inexpensive valuation should serve long-term shareholders well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar owns shares of ALGOMA CENTRAL.

More on Investing

Payday ringed on a calendar
Dividend Stocks

How to Convert $500 Monthly Investment Into $200 Monthly Income

If you want the stock market to give you regular monthly income, you have to invest in the stock market…

Read more »

falling red arrow and lifting

RRSP Investors: 3 Dividend Stocks to Buy on the Dip

Inflation has delayed retirement for Canadians. RRSP investors should buy cheap dividend stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS).

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

worry concern
Dividend Stocks

3 Ultra-Safe Dividend Stocks for Jittery Investors

Motley Fool investors nervous about the market downturn should consider these ultra-safe dividend stocks that keep paying passive income no…

Read more »

Economic Turbulence

The TSX’s 1st Crypto ETF Lost $500 Million in 1 Day

The TSX’s first crypto ETF lost $500 million is one day and is down nearly 58% year to date.

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

Is the Real Estate Boom Finally at an End?

It might be hard to believe, but Canada’s decades-long housing boom might be at an end.

Read more »

stock analysis

RRSP Investors: 2 Oversold TSX Financial Stocks to Buy for Total Returns

Top TSX financial stocks look oversold right now for RRSP investors seeking attractive dividends and total returns.

Read more »


Got $500? 3 Undervalued TSX Stocks for Superior Returns

These undervalued stocks have strong potential for growth and will likely generate superior returns in the long term.

Read more »