Opinions Barry Schwartz
High Liner FoodsHLF.TOCOMMENTJun 15, 2015
Barry SchwartzStock price when the opinion was issued
As of Jun 04, 2026. Market Open.
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HLF hit a multi-year high as the Mrs. Pauls and Van de Kamp acquisition looks solid. It continues HLF's plan to diversify its global supply chain, and it already co-manufactures for the brands. There will be a small 1c negative impact to earnings initially, but the strategic rationale makes sense for the long term. HLF is buying $75M in sales on a base of about $950 currently. The stock is up 18% YTD yet is still only 8X earnings. Debt continues to be high, however. We like the deal and the momentum. We would be OK buying this in a TFSA but for more aggressive investors only.
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#1 supplier to retail channel in Canada, and #1 in US to food services. Sells under own name and private label. Seafood consumption low in NA, huge potential for growth. Revenue growth stalled with consumers cutting back on higher-priced items. In rally mode again. Huge free cashflow, buying back lots of shares, increased divvie by 30%, paying down debt. Dirt cheap at 8x PE. Insiders own 40%. Feels it will be sold down the road.
The company is 120 years old and is the leading brand in North America in frozen value added seafood, number 1 in the Canadian retail segment and number 1 in the U.S. food services segment. Eating fish is considered a healthy alternative to eating meats and although Americans are not big fish eaters, there is good growth potential as attitudes may change. It is paying down debt as well as increasing the dividend by 30% and it recently reported record results. Trades at 7X earnings and insiders own 40%, almost unheard of.
He would not double down on it because we are in tax loss season. There could be some tax loss selling in November/December. It has fairly high debt. It now pays a dividend but did not do so when he owned it. They are a leader in the field and know what they are doing. They could do well in time.
There are a lot of takeovers in the food industry, and this can be taken over in a second if it wanted to, but they don’t want to do that. They want to continue to grow and expand their reach in Canada and the US. Organic growth has been lacklustre, but with the improving US economy, this will hopefully spill over. Generates a lot of free cash flow. Planning to pay down debt this year, and could be in a position to make another big acquisition by the end of the year. Only trading at 11X next year’s earnings.