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Strategies & Market Trends : Dividend investing for retirement

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To: Steve Felix who wrote (9419)	7/13/2011 12:31:22 PM
From: E_K_S	Read Replies (2) of 34328

Hi Steve - RE: SeaCube Container Leasing Ltd.(NYSE: BOX) TAL International Group, Inc. C(NYSE: TAL) finance.yahoo.com Good review on the competition to BOX. TAL International Group, Inc. C(NYSE: TAL) is one I missed and it appears they have a similar debt profile as BOX. I like that BOX also has the refrigerator units and provide a package transport option from ship to rail and/or truck. It seems like they are ready to grow too with only 30% of the market cap of TAL. That's a pretty compelling growth kicker. It was not clear what the useful life of their cargo units are but I would think that they would be around 10-15 years for the refrigerator variety. Typically you want to cover the cost of the asset from annual lease revenue(s) in 1/3 the life of the asset or in this case 3-5 years. For rail cars it is better as they pay for the asset in about 4 years and they last longer around 20 years. The other consideration is the lease term. They try to lease rail cars for a three year period. Then they stagger their leases so they have a pretty predictable revenue stream. It looks like these containers are done with annual leases. Finally, the cost of a typical rail car (ie one that carries oil) is about 25x that of a refrigerator container unit. I suspect that efficiency and new technology plays a big role in these new containers so over time you may be able to replace units at a lower overall cost. Rail cars have pretty much used the same technology w/o any new innovations. Bottom line, this sector can generate excellent free flow cash that can be used to pay dividends. With a sector PE around 9x you do not pay too much for these earnings. Combine this with the growth kicker for BOX (a possible 3 bagger in Market Cap to reach its peers), you should get BOTH a growing dividend stream and a rising stock price. It will be interesting to see if they enter into any other types of model transport services or plan to build their growth around these hybrid container packages. This was a good find and I will look for an entry point to add a few shares in the IRA. EKS

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