Clearwater Seafoods Inc.

CLR-T

Analysis and Opinions about CLR-T

Signal
Opinion
Expert
DON'T BUY
DON'T BUY
May 17, 2019
Corporate debt level? Companies need working capital to grow. Shareholders want to participate as much as possible, so they prefer the company to use debt. Too much debt can be challenging for cyclical stocks. CLR-T debt service is challenging. With sales growth expected to be lower next year, it too is challenging. Net debt to equity has improved to D+ in his grading. A stretched balance sheet with 2.6 times debt-equity. They seem to have strapped on a lot of debt. He thinks there are better opportunities.
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Corporate debt level? Companies need working capital to grow. Shareholders want to participate as much as possible, so they prefer the company to use debt. Too much debt can be challenging for cyclical stocks. CLR-T debt service is challenging. With sales growth expected to be lower next year, it too is challenging. Net debt to equity has improved to D+ in his grading. A stretched balance sheet with 2.6 times debt-equity. They seem to have strapped on a lot of debt. He thinks there are better opportunities.
DON'T BUY
DON'T BUY
February 27, 2019
He used to favour this stock. Its challenge--and demise--is the debt it takes to operate this kind of company, like the costs of clam vessels. The balance sheet got hit. Now, CLR is recovering, but you don't want to own a company with heavy debt at this point in the cycle.
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He used to favour this stock. Its challenge--and demise--is the debt it takes to operate this kind of company, like the costs of clam vessels. The balance sheet got hit. Now, CLR is recovering, but you don't want to own a company with heavy debt at this point in the cycle.
DON'T BUY
DON'T BUY
November 27, 2018
Likes it. Excellent managers. But they've run into problems, including a big acquisition a few years ago that's fallen short of revenue expectations. Another one, they took on a lot of debt, which still worries him.
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Likes it. Excellent managers. But they've run into problems, including a big acquisition a few years ago that's fallen short of revenue expectations. Another one, they took on a lot of debt, which still worries him.
WAIT
WAIT
October 25, 2018

It has moved up. There has not been a major resistance level for it to break through. It is a showme story, though. Wait for it to get through $6 before getting in.

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It has moved up. There has not been a major resistance level for it to break through. It is a showme story, though. Wait for it to get through $6 before getting in.

WATCH
WATCH
September 26, 2018

Chart consolidates once in a while. The last one was sideways. This year it's seen a tame uptrend, and is on the verge of breaking the larger downtrend. The lows and highs are getting higher. Watch it--it could break out.

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Chart consolidates once in a while. The last one was sideways. This year it's seen a tame uptrend, and is on the verge of breaking the larger downtrend. The lows and highs are getting higher. Watch it--it could break out.

WAIT
WAIT
August 28, 2018

He doesn’t think the new tariffs will hurt the stock because they sell into Europe and Asia. However, the US has opened a lot of fishing areas, which has significantly depressed clam prices. The Canadian government also took away one of Clearwater’s clam licenses and gave it to an indigenous nation. However, there were ethical issues in that process and the license is coming back up for bids. In the meantime, it is going back to Clearwater for a year. That will help. In general, it is a good company that is facing a lot of headwinds. It also has a lot of debt. He isn’t ready to buy YET. He wants to see a turnaround in the pricing of their products.

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He doesn’t think the new tariffs will hurt the stock because they sell into Europe and Asia. However, the US has opened a lot of fishing areas, which has significantly depressed clam prices. The Canadian government also took away one of Clearwater’s clam licenses and gave it to an indigenous nation. However, there were ethical issues in that process and the license is coming back up for bids. In the meantime, it is going back to Clearwater for a year. That will help. In general, it is a good company that is facing a lot of headwinds. It also has a lot of debt. He isn’t ready to buy YET. He wants to see a turnaround in the pricing of their products.

DON'T BUY
DON'T BUY
August 10, 2018

They used to hold this, but sold it a year ago following a couple of choppy earnings quarters. They had taken on sizable debt on an acquisition and have yet to see the fishing volume be in line with expectations of the street. They recently reported 5 times leverage on the balance sheet despite better earnings. This is not something they are interested in.

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They used to hold this, but sold it a year ago following a couple of choppy earnings quarters. They had taken on sizable debt on an acquisition and have yet to see the fishing volume be in line with expectations of the street. They recently reported 5 times leverage on the balance sheet despite better earnings. This is not something they are interested in.

PAST TOP PICK
PAST TOP PICK
July 23, 2018

(A Top Pick Aug 29/17, Down 46%) He sold earlier in the year. They have a fair amount of debt and people thought they had monopolies but recently there were a couple of cases with licenses being awarded to other groups like first nations. Investors got worried about the balance sheet.

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(A Top Pick Aug 29/17, Down 46%) He sold earlier in the year. They have a fair amount of debt and people thought they had monopolies but recently there were a couple of cases with licenses being awarded to other groups like first nations. Investors got worried about the balance sheet.

DON'T BUY
DON'T BUY
June 13, 2018

He exited this about 9 months ago after a couple of bad quarters. He thinks the majority owners, who hold over 50%, will likely look to take this private at some time. They have missed several targets lately and he does not like the debt levels as they may trigger covenants in the future.

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He exited this about 9 months ago after a couple of bad quarters. He thinks the majority owners, who hold over 50%, will likely look to take this private at some time. They have missed several targets lately and he does not like the debt levels as they may trigger covenants in the future.

WATCH
WATCH
April 30, 2018

Is it going to break up or break down? He likes stocks that base for a while and then break out. The sector has been weak but is now starting to get its legs. You may want to take a stab at this one although it has not broken its down trend yet.

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Is it going to break up or break down? He likes stocks that base for a while and then break out. The sector has been weak but is now starting to get its legs. You may want to take a stab at this one although it has not broken its down trend yet.

DON'T BUY
DON'T BUY
April 24, 2018

He has owned this before. The stock has been very tough recently. The business used to have monopoly positions with licenses that protected their investment. Recently, licenses have been awarded to other companies and this puts into question their monopoly position. This had read to a revaluation of the company. The company also has a fair bit of leverage on its balance sheets, and with recent stock performance, it is not in a position to raise capital.

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He has owned this before. The stock has been very tough recently. The business used to have monopoly positions with licenses that protected their investment. Recently, licenses have been awarded to other companies and this puts into question their monopoly position. This had read to a revaluation of the company. The company also has a fair bit of leverage on its balance sheets, and with recent stock performance, it is not in a position to raise capital.

HOLD
HOLD
March 26, 2018

He has a small short in this stock and considers this a hold. He is concerned about a recent Scottish company acquisition as the margins have not proven up. There have been some issues with eastern Canadian offshore licenses. This has led to increased leverage and there is not a lot of excess capital to growth with.

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He has a small short in this stock and considers this a hold. He is concerned about a recent Scottish company acquisition as the margins have not proven up. There have been some issues with eastern Canadian offshore licenses. This has led to increased leverage and there is not a lot of excess capital to growth with.

WATCH
WATCH
March 6, 2018

He used to follow this closely. He liked the CEO very much. The stock went up like crazy but has come down a lot. He might put it on his watch list again soon.

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He used to follow this closely. He liked the CEO very much. The stock went up like crazy but has come down a lot. He might put it on his watch list again soon.

DON'T BUY
DON'T BUY
March 1, 2018

He follows HLF-T but this one is similar. They had a majority of the clam market and the government put up a new license for it and this company did not win, costing about 10% of their business. They added debt over the years. Their margins are falling. They are a bit behind the ball on this taste mix. It is hard to get excited about either at this point in time.

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He follows HLF-T but this one is similar. They had a majority of the clam market and the government put up a new license for it and this company did not win, costing about 10% of their business. They added debt over the years. Their margins are falling. They are a bit behind the ball on this taste mix. It is hard to get excited about either at this point in time.

COMMENT
COMMENT
January 23, 2018

On the surface it looks like a business with very high barriers to entry, with licenses giving them almost monopoly positions. Also, it’s a capital-intensive business, where they put a lot of money into large ships, recouping it through cash flow earned by harvesting seafood. Historically, they’ve generated high returns on capital, and they’ve been good investments, but in certain periods it leads to a lot of spending, negative free cash flow, quarter to quarter volatility. As a value investor, he likes to see a nice steady cash flow stream. With this one, you have to take a very long-term view. If you can do that, it is a pretty good business.

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On the surface it looks like a business with very high barriers to entry, with licenses giving them almost monopoly positions. Also, it’s a capital-intensive business, where they put a lot of money into large ships, recouping it through cash flow earned by harvesting seafood. Historically, they’ve generated high returns on capital, and they’ve been good investments, but in certain periods it leads to a lot of spending, negative free cash flow, quarter to quarter volatility. As a value investor, he likes to see a nice steady cash flow stream. With this one, you have to take a very long-term view. If you can do that, it is a pretty good business.

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