There are times when one feels he's quite clearly inserted his foot into his mouth. The staggering 34% nose-dive that HQ Sustainable Maritime Industries (HQS) took today would mark one of these fabulous occasions. The stock I've recently been touting here at The Springboard closed at the end of today's trading at $7.86. That's still higher than the stock's 52 week low of $7.01, but falls horribly short of its $16.45 high which it reached back in July.
Still, I think this stock has plenty of upside, and today's drop is simply a short-term setback which also happens to provide an interesting opportunity to add more shares for the patient investor. As far as I can tell, the fundamentals are still strong and today's drop is clearly a severe overreaction on the part of nervous investors in a market that still incites a jitter or two here and there.
In response to an email I sent off to HQ Sustainable's CEO Norbert Sporns, he told me that the company is experiencing a "temporary speed-bump," and that the company is in great shape going forward. "We have improved our buyer base and expanded our fish by-product sales network," said Sporn. According to Sporns this will result in additional sales and profitability. "This quarters results were affected by rapidly rising costs which rose faster than we could pass them along."
It's not an unfamiliar story lately. And the fact that HQS does its farming in Hainan, China to export to the US, the weaker dollar may have had an impact on profits. Going forward, a strengthening dollar will also help to give them a little boost. That, and the fact that farm-raised fish continues to be of interest to consumers will help HQS to improve its margins and return to profitability.
I'd wait until HQS reaches around $10 a share again before buying any more, though.
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