Genesis Lease Could Be a Highflier

And most importantly in my book, it operates in a business where demand far outstrips supply, so GLS has great pricing power. And because its shares have been hit so hard lately, it pays a whopping 10% dividend. At a time when the Treasury note is around 5%, that's a lot of yield.

Of course, any time you get a lot of yield, you must be giving something up -- and that is the risk of volatility. And to be sure, buying GLS shares today also looks like the proverbial attempt to catch a falling knife. For that reason, start small, and only add more to the position by averaging up as the shares improve over time.

The Growth Story

Why should they improve? Well, Genesis is a lot like other vessel-leasing companies in that it grows by renting its assets out to financially solid customers in the passenger or cargo-leasing business at increasingly higher rates, and also by adding to its fleet through timely acquisitions.

Genesis has already fulfilled its stated mission to grow its fleet by a third this year; this directly provides a commensurate increase in earnings and cash flow. I believe that the civil airliner business is a great asset class as global air travel demand relentlessly increases and planes remain in short supply.

Chief Executive John McMahon told me that Genesis is differentiated from its peers by focusing on much younger aircraft, ranging from a couple of years old to five years old, and by having a slightly less aggressive stance toward acquisition than its peers. It has plenty of room to grow. Genesis started with 41 planes, and it now has 52. In a world fleet of 18,500 commercial jet aircraft, which is expected to double over the next 20 years, you can see the opportunity.