Fresh Del Monte Produce Inc (FDP), Limoneira Company (LMNR), Calavo Growers, Inc. (CVGW): Produce Stocks Can Make You Green

The big banana
Fresh Del Monte Produce Inc (NYSE:FDP) is much larger at a $1.7 billion market cap. The international producer and distributor of produce, especially bananas, is trading at the lowest price to book of these at .89 (Calavo Growers, Inc. (NASDAQ:CVGW) at 3.73 and Limoneira Company (NASDAQ:LMNR) at 3.56) and the lowest trailing P/E of 13.40.

The company offers a 1.70% yield, at an easily sustainable payout ratio of 20%. Price to sales is also the lowest of these at .46. Its stock hit a 52 week high of $29.85 on September 9.

Fresh Del Monte Produce Inc (NYSE:FDP) competes with Calavo Growers, Inc. (NASDAQ:CVGW) not only on avocados but also fresh cut convenience offerings, with Fresh Del Monte reporting a 7% increase in North American fresh cut sales. Fresh Del Monte also has a vibrant emerging market and global business, with second quarter net sales up 36% in the Middle East and stronger performance in Asia.

The Foolish takeaway
There is still risk with produce stocks despite a “burgeoning” demand for these companies’ products, as was pointed out in Calavo Growers, Inc. (NASDAQ:CVGW)’s annual report of a tomato market freefall in 2012 due to Mexican oversupply. Similarly, Fresh Del Monte’s gross margin took a second quarter hit due to a strike in Costa Rica forcing the company to source higher priced bananas in Ecuador, as well as unfavorable foreign currency transactions. Limoneira Company (NASDAQ:LMNR) also saw smaller avocados due to weather.

Nonetheless, all three are benefiting from worldwide trends toward healthier eating. Of these, Calavo Growers, Inc. (NASDAQ:CVGW) with its high yield and stake in Limoneira Company (NASDAQ:LMNR) is a better bet than Limoneira alone. Fresh Del Monte is the value name, trading below book, and it has an emerging market growth kicker.

The article Produce Stocks Can Make You Green originally appeared on Fool.com.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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