Please ensure Javascript is enabled for purposes of website accessibility

HQ Sustainable Maritime Industries (HQS)

HQ Sustainable Maritime Industries, Inc. (HQS, AMEX)—This Seattle, Washington-based company is an integrated company whose main enterprise is the farming of tilapia. The company’s primary farming operations are in the South China Sea off the island province of Hainan; a “pristine” area, as the company bills it. HQ raises its...

HQ Sustainable Maritime Industries, Inc. (HQS, AMEX)—This Seattle, Washington-based company is an integrated company whose main enterprise is the farming of tilapia. The company’s primary farming operations are in the South China Sea off the island province of Hainan; a “pristine” area, as the company bills it. HQ raises its fish in what it calls an all natural fashion, and sells its products to both wholesalers and retailers throughout the world. In addition to its staple tilapia, the company sells a variety of other consumer products, including ready-to-eat meals (usually featuring its own raised fish) under the Lillian’s Healthy Gourmet meals label. It also sells a line of health care and nutraceutical products; these latter, though, primarily to Chinese consumers. The company’s recent financial performance has been that of rapid—albeit uneven—growth.

Most recently, HQ’s shares took a pounding following a disappointing 2009 fourth quarter. That quarter revealed some of what can happen when a company grows too quickly; among other costs that hit the bottom line, the company had to write off some bad debts (“doubtful accounts”) where, apparently, their customers came on too quickly, and not all of them were credit worthy or serious. Traders pushed HQS from around $8 down to the $6 area on that news. That quarter pulled overall Fiscal 2009 net income down to $8.1 million, or 60 cents a share, from $10 million, or 79 cents a share a year earlier. Fiscal 2009 net sales, though, rose to $72.3 million from $67.7 million in 2008. I liked this company before the disaster in the Gulf of Mexico placed in jeopardy a significant chunk of America’s own fish production. Now, I like it more; and expect that business will pick up even more. ... HQS is added to our list of recommended Growth stocks as a BUY.

Chris Temple, The National Investor

Chloe Lutts Jensen is the third generation of the Lutts family to join the family business. Prior to joining Cabot, Chloe worked as a financial reporter covering fixed income markets at Debtwire, a division of the Financial Times, and at Institutional Investor. At Cabot, she is a contributor to Cabot Wealth Daily.