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New Food Plays for Investors

NEW YORK - Metals have had their boom and the cost of oil is still surging, but Nate Pile, editor of investor newsletter Nate's Notes, recently reminded Wall Street Reporter subscribers of the opportunities presented by soaring global food prices.

Mr. Pile has started recommending the PowerShares Agriculture ETF (AMEX:DBA) for investors looking for profits, a hedge against inflation, or both. So far, higher-end food companies like cultured dairy products vendor Lifeway Foods Inc. (Nasdaq:LWAY) have been able to maintain their already solid profit margins by passing rising materials costs on to upscale buyers, CEO Julie Smolyansky recently told Wall Street Reporter. And for those looking for even bigger returns, companies like premium seafood farmer Australis Aquaculture Ltd. (ASX:AAQ) (Pink Sheets:AUQCF) may be poised to soar in the next few years as American diners' demand for sustainable and healthy food overwhelms wild fish stocks. According to Starwood Research analyst Rick Grubbs, CFA, the stock has the potential to trade at $5-$6 if Australis can meet its goal of growing its sales to $100 million within the next 5 years. Highlights of Australis Managing Director Josh Goldman's recent interview with WSR include:

  • Management's confidence in the company's ability to meet revenue targets as awareness of its products "has really reached that proverbial tipping point" among consumers hungry for eco-friendly, healthy, and tasty entrees. Sales should be increasing "in a very significant way" in a matter of months.
  • How a new production facility in Southeast Asia is on track to boost output by around 10,000 tons a year over the next 5-7 years. "In the company's history, the major constraint has not been the distribution network or demand," Mr. Goldman says. "It's really been supply."
  • Why the company's products have the potential to create blockbuster markets of the future comparable to farmed salmon or tilapia today. "We are uniquely positioned with both large scale, knowledge about how to produce the fish, first-to-market positioning and, we think, a really powerful brand message."