As the article "Feast on These 5 Stay-at-Home Food Stock Favorites" begins, "These top stocks -- including the largest publicly traded company focusing on avocados -- are helping to keep both stay-at-home diners and investors satisfied. wIth indoor dining off limits in many regions and more people working from home, it's little surprise that consumers are increasingly stocking up on food products and snacks for in-home meals. From cereal and soup to vegetables and pizza, several contributors to MoneyShow.com highlight some stay-at-home food favorites."
In the past decade, avocados have earned the name of "green gold" as U.S. demand for avocados has more than doubled to 2.6 billion pounds during that time period. Perhaps no company is poised to capitalize on this trend than the largest publicly traded company focusing on avocados, Calavo Growers (CVGW) .
Calavo Growers is a global avocado industry leader and a provider of value-added fresh food. It procures and markets diversified fresh produce items, ranging from tomatoes to tropical produce such as papayas.
It manufactures and distributes guacamole, guacamole hummus, and salsa under the Calavo brand name. A wholly owned subsidiary, Renaissance Food Group, markets a portfolio of healthy, high-quality lifestyle products for consumers through fast-growing brands that include Garden Highway and Chef Essentials.
In the quarter ended April 30, Calavo completed the acquisition of Simply Fresh Fruit, a producer of fresh-cut fruit. The company has been integrated into the Renaissance Food Group, the fast-growing division focused on prepackaged fruits and other food items.
Looking ahead, Calavo may be able to shake off the effects of the global health crisis faster than many other companies. The health benefits of avocados may well resonate with a culture increasingly interested in health and well-being.
Analysts see a quick recovery for Calavo and estimate EPS of $1.96 for fiscal 2020. With EPS reaching $4.72 in five years, a future high price of $142 is achievable at a high P/E of 30. On the downside, the recent severe market low is $51. The stock is a buy up to $74 with a 10.7:1 upside/downside ratio. Adding in an average dividend yield of 1.5%, the stock could deliver an annualized total return of 20.7%.