Motley Fool Australia

3 Ways To Play The Dining Boom In FY 2018

baby food

We all know the easiest way to take advantage of the mining boom is to buy leading mining companies such as BHP Billiton (ASX: BHP), Fortescue Metals Group (ASX: FMG) and Newcrest Mining (ASX: NCM).

Personally, that’s not my cup of tea. But one boom I have tried to profit from over the years is the dining boom.

You see, Australia has a lot of great food and produce. And as with our ores, there’s plenty of demand for our produce around the world. The problem is that the dining boom is in its infancy, so it’s hard to know which companies to buy and hold.

Regretfully, I sold my shares in A2 Milk Company Ltd (Australia) (ASX: A2M) too soon. The company owns the well-known A2 Milk baby formula brand, which is popular with Daigou — professional shoppers who send products back to their clients in China. A2 Milk remains one of my favourite ways to play the dining boom, because it has a differentiated product, a strong brand, and it has been adept at managing the difficult challenge of serving Daigou.

Further south Huon Aquaculture Group Ltd (ASX: HUO) is one of three Tasmanian salmon farmers. Management have a major holding in the company, which has initiated court proceedings due to concerns its competitor Tassal Group (ASX: TGR) is overstocking Macquarie Harbour. To me, this indicates that Huon is taking a long term view towards the business and its industry, which makes me very interested in the company.

Finally, I have also previously owned shares in Capilano Honey Ltd (ASX: CZZ) which I eventually sold due to the fact I thought they were overvalued. I continue to support the company and delight in its successes — and I may well regret selling, one day. Most of you will be familiar with Capilano’s 100% Australian eponymous brand, and the company has grown profits by introducing new products such as Manuka Honey, prebiotic honey and premium selections (such as Iron bark honey). Capilano also owns other brands with which it sells a mix of local and imported honey. My main reservation about Capilano is it is very capital intensive since it essentially buys all the Australian honey on offer. That means free cashflow does not really match up with profit, and often necessitates debt.

While I’m not buying any of these companies today, I think they are all interesting. One reason I like the dining boom theme is that companies that sell goods or services overseas, have plenty of room to grow. Indeed, while around of the companies I own shares are virtually limited to Australia, my really big shareholdings all have overseas businesses. I suggest you check out the company named in this free report, since my friend and colleague highly recommends it. Personally, I have recommended a similar company.


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Claude Walker is a Motley Fool investment advisor. He does not own shares in the companies mentioned in this article. You can follow Claude on Twitter @claudedwalker. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

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