Sir John Templeton famously said, “If you do the same things as other people, you get the same results.” The biggest returns don’t come from headline stocks — they come from overlooked corners of the market. Let’s talk about why Safe Bulkers Inc. (SB) just passed one of my recent screens, explains Nicholas Vardy, editor of Microcap Moonshots.
A recent study by Verdad analyzed eight financial crises since the 1970s. The best post-crisis performers? Small-cap value stocks — cheap, ignored, and cyclically out of favor. Their research found that in the 12 months following a crisis, these stocks outperformed the market by 2X. After 24 months? 3X.
These weren’t the high-flyers of the last bull market. They were the castoffs — companies dumped in a panic. And yet, historically, they’ve delivered the highest gains for those who saw the opportunity first.
Safe Bulkers Inc. (SB)
I’ve reconstructed a mock guru screen for Verdad’s microcap picks. The key filters Verdad emphasizes are high debt relative to enterprise value, improving fundamentals, and liquidity.
Screening for high-debt small caps can feel counterintuitive — why chase companies carrying heavy obligations? Yet Verdad’s research shows that outsized returns can follow when leverage starts decreasing and fundamentals improve. If you’re willing to do the deep dive, these diamonds in the rough might sparkle in a portfolio hungry for contrarian value.
That brings me to Safe Bulkers. It’s a $392 million shipping company specializing in acquiring, owning, and operating dry bulk vessels worldwide. Its fleet transports various cargo, including coal, grain, and iron ore, and the firm has focused on maintaining a moderate balance sheet and paying dividends when profitable.
• Quality: The company’s “Quality” rank is 71, reflecting decent profitability metrics and operational efficiency in the dry bulk sector.
• Value: The “Value” rank of 98 indicates a strong valuation profile, as the stock appears inexpensive on price-based ratios.
• Momentum: With a “Momentum” rank of 15, recent share price performance has been relatively weak, despite some longer-term improvements.
Overall QVM Rating: 68/100
Recommended Action: Buy SB.
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