Fishing for Returns From Seafood Processors

World Bank says seafood demand will grow in the next 20 years.

The Motley Fool

As part of a balanced diet, Canada’s Food Guide recommends eating at least two servings of fish each week. This includes char, herring, mackerel, salmon, sardines and trout. Your stock portfolio also needs to be well-balanced. Here are two Canadian seafood processors to consider as an addition to your investing plate.

1. Clearwater Seafoods (TSX: CLR) is North America’s largest vertically integrated harvester, processor, and distributor of premium shellfish. The company sold more than 81 million pounds in 2013. It operates a large fleet of vessels and owns a number of processing plants in Eastern Canada. Clearwater introduced an annual dividend in 2013 of $0.10 per share, payable in quarterly installments of $0.025 per share.

The company is the largest holder of shellfish quotas and licenses in Canada. Moreover, it maintains the broadest selection of MSC-certified (Marine Stewardship Council) species of any shellfish harvester globally. Its fleet and licenses have an estimated value of over $500 million.

Clearwater is planning to invest roughly $45 million in a third vessel for its clam business. The company is working to increase its access to supply by 60%. It will construct a new clam harvesting vessel and Clearwater expects this vessel to commence operations in 2015.

Clearwater recently expanded its value-added retail and foodservice offerings. It introduced six new seafood items: Reduced Sodium Shrimp, Split Lobster with Butter, Scallop Selects, Bacon Wrapped Scallop Selects, and two new flavors to its Scallops & Sauce line. Scallops & Sauce was chosen as one of the Top New Products of 2013 by the editors of Seafood International.

Clearwater is focusing on the increased demand for imported seafood in China. In 2013, it launched a branded range for the Chinese retail market. The company is working to increase available supply to tap into this growing market. This includes expanding its lobster operations.

2. High Liner Foods

High Liner Foods (TSX: HLF) is the top North American processor and marketer of value-added frozen seafood. It offers retail brands in grocery stores and branded products to restaurants and institutions. It also offers private label value-added frozen seafood products to North American food retailers and food service distributors. Its brands include High Liner, Fisher Boy, Mirabel, Sea Cuisine, Icelandic Seafood, FPI, Viking, Samband of Iceland, and American Pride Seafood.

High Liner is focusing on innovation in the foodservice arena. It recently announced an association with Diageo (NYSE: DEO), which involves the addition of a new line of seafood products for the U.S. foodservice market made with Guinness® stout. Diageo is the producer of Guinness® and this brand recently celebrated the 250th anniversary of the signing of the lease on St James’ Gate Brewery, Dublin.

In October 2013, High Liner Foods acquired the principal assets and operations of American Pride Seafoods from American Seafoods Group. American Pride is chiefly a value-added frozen seafood foodservice and scallop processing business. It processed over 7.0 million pounds of scallops last year. This acquisition enhances High Liner’s leadership position in the food service sector of the U.S. value-added frozen seafood industry.

High Liner received the Frozen Foods Processor of the Year Award for 2013, from Refrigerated & Frozen Foods Magazine. It received this award for its growth and industry leadership in sustainability, packaging, food safety, new product development and capital investment.

High Liner is concentrating on supply chain improvement and operating improvements. Its integration of American Pride Seafoods begins this quarter. This will contribute to economies of scale and cost reductions.

Foolish bottom line

These two seafood companies have strategies in place to take advantage of the global growth in seafood demand. Consumers’ tastes are changing, gravitating away from some meats to new and more healthful product offerings in the seafood category. Consider this trend when looking to tweak your stock portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Michael Ugulini has no positions in any of the companies mentioned in this article.

More on Investing

A man smiles while playing a video game.
Retirement

Retired Canadians: The Smartest Income Stocks to Buy With $5,000

TD Bank (TSX:TD) stock stands out as a dividend stock steal at these prices.

Read more »

Target. Stand out from the crowd
Investing

3 Stocks to Buy and Hold for the Next 10 Years

These Canadian stocks have potential to deliver significant returns over the next 10 years and diversify your portfolio.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

How to Use Your TFSA to Earn $5,000 Per Year in Tax-Free Income

Are you looking for ways to earn $5,000 in TFSA passive income? Consider rebalancing your portfolio, shifting $20,000 to these…

Read more »

money cash dividends
Dividend Stocks

Dividend Powerhouses: Top Canadian Stocks to Enhance Your Portfolio

Three TSX dividend powerhouses are the top options for Canadians looking to enhance their investment portfolios.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Investing

1 Safe Canadian Utility Stock Offering a Secure Yield

Hydro One (TSX:H) stock looks like a worthy bet as the tides get somewhat rougher in Q4 2024.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

The Best Stocks to Invest $2,000 in Right Now

Do you have some extra cash to invest this month? Here are two value-priced dividend stocks to buy for a…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

TFSA: Can You Really Invest $95,000 Tax-Free?

You can, in fact, hold TSX stocks like Alimentation Couche-Tard Inc (TSX:ATD) tax-free in a TFSA. But can you hold…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

TFSA: 4 Canadian Stocks to Buy and Hold Forever

TFSA investors can expect to generate above-average capital gains from these fundamentally strong Canadian stocks.

Read more »