Thursday, October 10, 2013

Seeking Alpha: Calavo Growers Presents A Tricky Growth/Value Trade-Off

Fresh produce is one of those industries where margins and free cash flow generation are typically poor across the board. Dole Food (DOLE), Chiquita Brands (CQB), and Fresh Del Monte (FDP) all have struggled to generate attractive margins over the long term. Even so, this sector can offer good capital appreciation potential when bought/sold opportunistically.

Calavo Growers (CVGW) is an interesting story right now. Although the shares do look expensive, management has some ambitious plans to diversify the business, further leverage its fresh produce capacity, and consolidate the fresh produce space (at least on a limited basis). The company is also trying to increase the percentage of value-added products it sells, while simultaneously launching an overnight fresh produce/meal business. With those initiatives in place, the possibility certainly exists that Calavo could deliver positive revenue and margin surprises and redeem what otherwise looks like a stretched valuation.

Please follow this link to read more:
Calavo Growers Presents A Tricky Growth/Value Trade-Off

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