Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stock tips as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.

This week we had a question from an Inner Circle member about a Canadian seafood company whose stock has risen in recent months. Clearwater Seafoods has enjoyed strong financial results while benefiting from a positive outlook for seafood markets. Pat examines the factors behind the company’s strong showing. He also assesses Clearwater’s longer-term outlook in light of both rising global demand and stiff global competition.

Q: Pat: Can you offer any information or advice on the recent price rise and volume of Clearwater Seafoods on the TSX? Thanks.

A: Clearwater Seafoods (symbol CLR on Toronto; www.clearwater.ca) is one of North America’s largest seafood companies and the biggest holder of shellfish licenses and quotas in Canada.

The stock has risen on the company’s strong financial results and a positive outlook for its seafood markets.

In the quarter ended September 27, 2014, Clearwater’s revenue rose 17.6%, to a third-quarter record of $134.1 million from $114.0 million a year earlier. Cash flow rose slightly, to $22.85 million from $22.78 million, although cash flow per share fell 6.7%, to $0.42 from $0.45, on more shares outstanding.

Higher costs of harvesting shrimp and scallops curb cash flow

Clearwater’s revenue rose on strong demand, particularly for turbot and clams, and higher prices for scallops, shrimp and lobster, as well as a higher contribution from U.S. sales because of the rising U.S. dollar. However, higher harvesting costs for scallops and shrimp held back cash flow.

Clearwater recently raised its quarterly dividend by 20%, to $0.03 from $0.025. The stock now yields 0.8%.

Seafood demand is rising with a growing global population, a shift toward healthier diets and wealthier middle-class consumers in developing nations. That’s good for Clearwater, though the company does face significant competition from major global firms.

We view Clearwater Seafoods as a hold, but for aggressive investors only.