Salmon farmer and supplier Tassal Group Limited (ASX: TGR) posted a 22.4% increase in net profit this morning despite a 2.4% decline in revenues of $266 million. The group actually sold less fish over FY 2014 than FY 2013 due to reduced supply, primarily the result of the tail end of the hot summer of 2012/13.
The group has refocused on selling its salmon products into the domestic market recently, after only moderately successful attempts to sell its products overseas. Having made some significant capital expenditures over the past few years the salmon farmer will now also be hoping the platform has been laid for bigger returns going forward.
Chief executive, Mark Ryan said of the outlook: "Tassal can continue to translate the success of its domestic market strategy into growing sustainable earnings, growing cash flows, reducing debt, and growing dividends".
The final FY 2014 dividend was 6 cents at a 50% franking rate. The total annual payout was 11.50 cents per share, up 21.1% on the prior year.
You don't need to be Warren Buffett to realise that companies involved in food production should be in the box seat to generate growing returns on the back of rising populations and growing demand for foodstuffs. If able to execute on its operational growth strategy, I think Tassal looks a business with potential to outperform the market consistently into the future.
With significantly improved operating earnings forecast for FY 2015 Tassal remains a solid buy trading at today's price of $3.99 in my opinion. However, there's another business which might offer even better potential on current valuations.
If you're interested in reading all about our favourite growth stock to buy right now then just enter your email below and we'll send you the full report absolutely free!
