Fools fooled by Five-star Fish
About a month ago, I responded to a request for blogs related to investing with an observation on a 5-star stock with nearly all the green thumb picks underwater. Low and behold, HQ Sustainable Maritime (HQS) popped up again as my Friday "Stock of the Day" suggestion.
Interestingly, the CAPS rating disconnect has gotten even more bizzare. HQS sports a 5-star CAPS rating, but every one of the 401 active green thumb picks are in the hole and all 14 active red thumbs are ahead. A perfect rating mismatch for a 5-star stock.
The fundamentals on this thing look incredibly cheap. The company had $43 million of cash on the books at the end of its last reported quarter. It's since raise $11 million in a share offering. With the share offering, there are a little under 18 mllion shares out. That's about $3 a share in cash for a profitable company with no debt trading at $2.75. The business concept is unexciting, but sound - farm raised tilapia and processed seafood nutritional products.
Trailing pe is 5, forward pe est is 3. There are some red flags, ttm cash flow is negative - that appears to be related to a receivable adjustment last year. Receivables are very high, nearly two quarters worth of revenue. It's also a little tough to understand why a company with $43 mil of cash on the books felt it necesary to float a dilutive share offering. Fellow Fool guiganol did a nice job of running it down here with some good info provided by others in the replies.
Sorry there's no investable intelligence here. I'm not even brave enough to weigh in with a CAPS pick on HQS. The valuation says 'buy, buy, buy' then back up the truck and buy some more. But, the stock's performance screams 'run away, run away' louder than the knights from Monty Python and the Holy Grail.