Two Container-Ship Stocks to Float Your Boat

Wang, a Canadian citizen, was working as a consultant for the national Chinese shipping line in 1998 during the Asian financial crisis when he noticed that the demand for ships was weak and prices were low.

He recommended that the shipping line increase its container-ship fleet, but executives demurred, complaining that it would be two years before they could get funding through the government bureaucracy. Wang said he then asked how long it would take to get funding to obtain ships on a long-term charter, and the executives said it would take no time at all because it would be a simple business transaction, not a capital expenditure.

Fleet on Its Feet

That got Wang thinking. He went home and called up some business acquaintances and proposed that they borrow some money and partner up to create a company that would buy container ships cheaply and put them out on long-term charter to the Chinese and other carriers.

He obtained the backing of Montana copper and construction magnate Dennis Washington, the chairman of Washington Group International(WNG Quote - Cramer on WNG - Stock Picks), and together they persuaded some European banks to provide financing.

Wang's big idea was to create the Southwest Airlines(LUV Quote - Cramer on LUV - Stock Picks) of container-ship lines. He wanted all new ships to be interchangeable so they would be easy to run and maintain.

He wanted to be the low-price leader, and he wanted to grow by at least 15% per year. In the late 1990s, with shipping at low tide, he was able to buy five new ships from Samsung Heavy Industries and needed to wait only 13 months. Demand is so strong now that if you can find a shipmaker who will take your order, you have to wait four years.

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