Increasing Fish Consumption Makes Sysco a Good Addition for Investors' Portfolios

A recent United Nations report found that global fish consumption has reached an all-time high.
By Kat McKerrow ,

There's a new report from the United Nations' Food and Agriculture Organization (FAO), and the results suggest that a investors could gain from investing in companies that sell fish and provide related services.

According to the FAO, per-capital global fish consumption has hit all-time record highs. On average, one person ate a whopping 44.2 pounds of fish in 2014, The State of World Fisheries and Aquaculture 2016 said. That's double the amount of fish eaten in the 1960s (21.8 pounds). The trend is expected to continue, as well.

The report credits this upswing to growing global demand for fish caused by population growth, rising incomes, and an improvement to fisheries' stocks. In addition, people are eating more fish because of the perceived health benefits.

Investors looking for sizable profits may want to consider Sysco (SYY) - Get Report , the food service behemoth. The company, which already has exposure to seafood markets, added significantly to its portfolio earlier this year with the purchase of North Star Seafood, which distributes high-quality fresh and frozen fish. Although the financial terms of the deal haven't been revealed, North Star generates about $128 million in sales per year.

Sysco finished slightly up in Friday trading. 

This follows a number of other deals for seafood-related companies in recent years. In 2015, the company grabbed a 50% stake in Pacific Star Foodservice, one of Mexico's major food distributors. And the company also announced the purchase of Tannis Trading, which serves markets in Canada, and the U.K.'s Brakes Group for $3.1 billion.

But another acquisition could propel shares even higher. Sysco announced this week that it would purchase Supplies on the Fly, a platform that will allow Sysco customers to purchase more than 170,000 products online. Logistics-related purchases are key for the company right now, especially following the failure of its planned takeover of US Foods.

These acquisitions promise to give a further boost to Sysco's already growing business.

Darden Restaurants might have been another beneficiary of the fish consumption increase, but the company sold Red Lobster to private equity firm Golden Gate Capital. Darden is by far the country's top-selling seafood restaurant, reeling in more than $2.4 billion in sales last year.

Sysco's stock has already gained more than 20% year to date. However, by expanding its worldwide business, and given its healthy portfolio of seafood products, Sysco has plenty of potential for even more growth. Looks for solid profits from this stock.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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