Our latest recommendation is the market leader in the mundane and niche space of dredging and the company has been around for more than 100 years, although it did not come public until 2006, asserts Bret Jensen, editor of Small Cap Gems.

Great Lakes Dredge & Dock (GLDD) owns and operates some 32 vessels of various types, seven based in the Middle East and the rest domiciled in the United States. There are several things that make this small company an attractive long-term play.

First, despite its small size, over the last three years, Great Lakes has won just over 45% of the new dredging contracts awarded domestically, a total market that was just over $3.2 billion.

US-based dredging firms are shielded from foreign competition by the Jones and Dredging Acts which makes it is extremely difficult for companies outside the US to bid on contracts in the domestic dredging market.

In addition, the expansion of the Panama Canal should improve the environment for increasing dredging activity over the next few years. This is triggering expansions at myriad US ports to deepen their facilities to accommodate these larger ships.

Great Lakes also offers river and lake dredging and coastal protection such as rebuilding and bolstering beaches and coastal defenses. Coastal protection—highlighted by Superstorm Sandy—should be a good source of revenue over next few years.

Meanwhile, crumbling domestic infrastructure is also one of the few areas of agreement between the two political parties. Given this, I think there is high probability that government infrastructure spending increases at a good clip over the next couple of years.

The company also gets a decent amount of revenue from overseas. For example, Great Lakes was awarded the $140 million Suez Canal deepening project during the fourth quarter of 2014.

And its Terra subsidiary is growing rapidly; this division also does wetlands restoration and plant decommissioning such as old utility and coal plants.

The past year was spent reconfiguring the company’s business portfolio and in integration efforts following an acquisition; 2015 and beyond is where the Great Lakes should start to see the fruits of its labor.

Earnings should more than double in FY2015 to over 40 cents a share. The stock is selling at just over $6 a share after being above $9 about one year ago. I believe the stock can approach its previous highs over the next 12-18 months as margins and earnings improve.

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