Companies with the highest earnings per-kilogram now cost the most, Pareto says.
Pareto Securities has long been positive to aquaculture on the Oslo Stock Exchange, and so far this year, they’ve been well-rewarded for it.
The best returns on investment were harvested by recommending SalMar. In just 90 days, the company stock is up over 50 percent.
More to buy
The brokerage believes there’s more out there, so it’s overweight in “buy” recommendations. Share prices vary wildly, however:
Measured in 2018 price-per-earnings, or PE, Leroy owner Austevoll Seafood is ahead of The Scottish Salmon Company by a hair as the cheapest salmon share in Pareto’s coverage. Austevoll Seafood trades today at a PE of 7.7 and is one of four shares traded for under 10 PE, according to Pareto’s estimates, expenses and salmon-prices forecasts.
By that pricing method, only the class favourites — costs leaders Bakkafrost and SalMar — achieve the highest multiples and are therefore valued as “priciest”.
If you look at direct returns — or so-called dividend yield — it’s Grieg Seafood ahead of Marine Harvest in offering the most upside. Grieg Seafood achieves a direct return — or dividend divided by share price — of 6.8 percent, and that’s miles above the bank’s risk-free interest.
At the opposite end of the scale, Bakkafrost, too, is seen as the weakest and the strongest card to hold. The company earns a direct return of a moderate 3.3 percent.
Bakkafrost has been in its own league in earnings-per-kilo in recent years, and so it is, in other words, “fully priced”. According to Paretos calculus, other shares are considerably cheaper, so Bakkafrost, then, is the only salmon share Pareto has a “hold” recommendation on.
For the rest, it’s “buy”.