10 Best Small-Cap Stocks to Buy Now According to Minerva Advisors

4. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)

Number of Hedge Fund Holders: 17

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), based in Houston, Texas, serves government agencies at various levels. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) operates a range of equipment, including hydraulic and hopper dredges, used in projects like port expansions, coastal restorations, and marine structure constructions. The company is also involved in offshore wind and LNG projects. Minerva Advisors owned 1,312,143 shares of Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) at the end of Q1 2024, worth $11,468,130, which represented 7.02% of its total portfolio.

In FY2023, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) earned 21 cents per share from over $589 million in revenue. Analysts expect profits to more than triple to 72 cents per share in FY2024 with sales reaching $746 million. For FY2025, they forecast earnings of 80 cents per share on a five percent increase in revenue.

Cove Street Small Cap Value Fund stated the following regarding Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in its first quarter 2024 investor letter:

“We made some sales during during the quarter as well. At the beginning of 2023, we initiated a position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) in the midst of a significant decline in the company’s results. Facilitated by the U.S. government, the “bid market” of projects for which GLDD competes evaporated in the first half of 2022 due to some combination of an extra-long Continuing Resolution, overly complicated budget authorization and allocation processes, and frankly, work-from-home inefficiencies. When your dredgers aren’t at work because you didn’t get your bid, you send them to the shipyard for maintenance, causing a “double-whammy” of less revenue and higher costs. GLDD’s margins in 2022 got crushed, as did the stock price. The bid market returned in late 2023, and GLDD’s backlog rebounded from $452m around the time of investment to $1.04B in early 2024, leading to a commensurate rise in the stock.

Concurrent with the return of Great Lakes’ core business to normalized conditions, GLDD has begun construction of a “wind vessel” with the purposes of facilitating the building of offshore wind farms on the East Coast of the United States beginning in late 2025. Given the myriad of headwinds facing these projects, this wind ship will be delivered into a highly uncertain demand environment for its use. We happily exited with the gains from our underwritten “bid market reversion” and before “wind” plays out.”