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Revenue rose 34% in the third quarter as container shipping remained strong in 2010. Despite shares trading near 52-week highs, Textainer Group Holdings Limited (TGH - Snapshot Report) has a forward P/E of just 10.6.

Textainer is the largest lessor of intermodal containers in the world, leasing to more than 400 shipping lines. The company also sells used containers to more than 1,000 customers.

Container Shortage in 2010

Textainer has been cashing in on a worldwide shortage in containers. During the recession, no one produced new dry freight containers. Combined with the retirement of old containers, once demand picked up again in 2010, there was no supply. The world container fleet actually declined 4% in 2009.

Even after production resumed on new containers, it has taken some time to get back to full throttle. Demand for containers also continued to grow. Cargo volumes are expected to climb 10% to 11% in 2010 compared to 2009.

Textainer's leasing division should benefit going forward as many shippers will not be buying new containers, but will turn to leasing to meet demand.

Textainer Beat By 4.7% in the Third Quarter

On Nov 4, Textainer reported third quarter results which once again surprised on the Zacks Consensus Estimate. This was the smallest surprise in the last 4 quarters, however.

Earnings per share were 67 cents compared to the consensus of 64 cents. The company made just 29 cents in the year ago quarter.

Revenue grew $19.2 million to $75.3 million. Average fleet utilization rose to 98% in the quarter from 85.4% a year ago.

The company also has purchased 212,620 TEU in new containers through the third quarter for delivery through December 2010.

Raised the Dividend Again

Given the industry fundamentals, Textainer raised its dividend for the third consecutive quarter to 27 cents per share, an 8% increase.

The shares are now yielding a juicy 3.7%.

Double Digit Earnings Growth Expected in 2010 and 2011

Analysts are still bullish on the company for 2010. The 2010 Zacks Consensus Estimate has risen by a penny to $2.48 in the last 30 days.

Earnings growth is expected to be 46.9%.

While the growth is expected to slow in 2011, analysts are still looking for $2.84 per share, which is continued earnings growth of 14%.

Still a Value Stock

Textainer was a value stock when I last reviewed it in Sep 2010 and remains so. In addition to its current low P/E ratio, it also has a price-to-book of just 2.3 which is well within the range of a value stock at under 3.0.

Given its high growth rates and low P/E, the company sports a PEG ratio of just 0.9.

This Zacks #2 Rank (buy) stock is scheduled to report fourth quarter results on Feb 9.

Shares are trading near the top of the range on the 2-year chart.

Read the September 15, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

With all the publicity given to the surge in oil prices lately, many might not have noticed that coal prices have been hot as well. Cloud Peak Energy Inc. (CLD) is hitting new 52-week highs. The stock is still a value play, trading at just 12x forward estimates. Read the full article.

Huntsman Corporation (HUN) grew earnings by over 100% in 2010 and is expected to see double digit earnings growth in 2011. Even though shares have soared, Huntsman is a value play, trading at just 13x forward earnings. Read the full article.

Despite talk of a housing bubble in China and banks tightening lending, Chinese real estate development continues on. Still, investors are nervous about the sector and the stock valuations reflect that. China Housing & Land Development Inc. (CHLN), for example, is dirt cheap, trading at just 3.5x forward estimates. Read the full article.

The beverage market continues to expand as ready-to-drink teas, flavored waters, and sports drinks take center stage over the colas of the past. Cott Corporation (COT) is cashing in on the change in consumer preferences. Shares are still a value, trading at just 9.7x forward estimates. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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