While vast quantities of oil were leaking into the Gulf of Mexico, the eyes of the world have been focused on the coastal sprawl stretching from Texas, east past the Mississippi River delta at the gulf, all the way to Florida. It’s one of the best recreational areas in the U.S., or at least was, and it is generally known as being one of the top fishing regions in the world.
According to NOAA (National Oceanic and Atmospheric Administration), there are approximately 5.7 million recreational fishermen based in the region who take 25 million fishing trips a year. Commercial fishermen in the region harvest more than 1 billion pounds of fish each year. To outfit these fishing expeditions takes a lot of bait, tackle, miscellaneous fishing equipment of all types, boats and boating related equipment.
But with fishing activities temporarily closed in certain areas due to the oil spill, the industry most surely has been, and may continue to be, impacted no matter how the outcome of British Petroleum’s new fix ultimately turns out. No doubt this has been hazardous to small cap companies focused on the fishing industry, so let’s take a look at how four have fared to this point.
Watsonville, CA-based West Marine (Nasdaq: WMAR, http://www.westmarine.com), a specialty retailer of boating supplies, has been riding a growth wave for the past several years. Two years ago, in July 2008, the stock had bottomed out at about $4. Since then, however, the stock has been on a steady, if somewhat choppy, ride back up as high as $13.63 last May and, so far at least, it shows no signs of being harmed substantially by the spill. Revenues have grown to nearly $600 million annually and the company recently reported its sixth straight pre-tax improvement in year-over-year operating results. Just last month Avondale Partners initiated coverage with a market outperform rating. Might be one to watch.
Morgan Hill, CA-based Coast Distribution System (Amex: CRV, http://www.coastdist.com), a distributor of boating and marine products (along with RV products) including boat covers, hardware, anchors, depth sounders to customers including boat dealers, boating parts supply stores and service centers, is tiny–market cap $19 million–and trades only about 1,700 shares a day. The company cut expenses to get through the difficult economic issues of 2009 and reported a slight gain in revenue (to $24.1 million) year over year for the first quarter of 2010. With distribution centers in Texas and Florida, CRV will be interesting to see how it gets through the summer.
Clearwater, FL-based MarineMax Inc. (NYSE: HZO, http://www.marinemax.com) is the nation’s largest recreational boat and yacht dealer, selling new and used boats including sport boats, sport cruisers, yachts and fishing boats, as well as related marine products through 55 retail locations including Texas and Florida. Its market cap is about $156 million and about 280,000 shares trade per day. While there’s no telling if it is oil spill-related, since mid-May, the stock price has taken a tumble from $12.58 all the way down to $6.36 on July 6. Like the market in general it’s bounced back, however, in the past few days to upwards of $7.80. On June 25 the company announced it had secured a $100 million financing facility with GE Capital, its only outstanding debt.
Houston-based Omega Protein Corp. (NYSE: OME, http://www.omegaproteininc.com/) processes and markets fish meal and fish oil products, which it sells all over the world. The company’s fish meal products include those derived from gulf shrimp and fish; its fish oils are used for animal and aquaculture feeds as well as additives to human food products and industrial applications. Some of its protein and oil products are derived from menhaden, a species of wild herring-like fish found along the Gulf of Mexico and Atlantic coasts. That may be why the stock price has tumbled since May, when after climbing up to nearly $6.70, it began a steady decline to $3.83 on June 8. Like most stocks, however, OME has enjoyed July and surged back to $5.15 on July 13.