September 17, 2020
On September 4, Mission Produce Inc., the largest global supplier of avocados, announced that it filed a registration statement with the SEC for an initial public offering of its stock, applying for the symbol AVO (Tii:AVO). With that potential IPO in the works, let’s continue our series on owning the supermarket brands you love with a trip down the produce aisle.
While the supermarket produce aisle may not have the same kid appeal as do the snacks or frozen dessert sections, fruits and vegetables are a big part of consumer diets and the agricultural industry behind it is one of the backbones of the U.S. economy. But let’s face it, this year hasn’t been a pleasant one for this industry. During the early part of the coronavirus pandemic, hospitality businesses, restaurants and schools shut down, resulting in a stalled fresh produce supply chain and billions in losses as these outlets represent nearly half of the produce consumed in the nation.
This has impacted not just the actual growers and producers of fruits and vegetables, but suppliers like CF Industries Holdings, Inc. (Tii:CF), which manufactures and distributes agricultural fertilizers, Corteva, Inc., (Tii:CTVA), an agricultural chemical and seed company, and of course the farming equipment makers like John Deere, the brand name of Deere & Co. (Tii:DE).
However, industry demand from grocery stores has surged as consumers have been forced to turn to retail outlets as their primary source for produce, according to global industry research firm IBISWorld. Also on the plus side, the firm predicts that the industry will not be severely affected long-term as fruit and vegetables are items customers will continue to purchase even amid a recession. That said, these are the companies best poised to directly benefit from current consumer trends.
Calavo Growers, Inc. (Tii:CVGW)
A major avocado grower and provider of value-added fresh food serving retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers worldwide, Calavo Growers has a strong presence in the produce aisle. The company’s Fresh segment procures and markets fresh avocados and select other fresh produce, including tomatoes and papayas, while its Renaissance Food Group segment creates, markets and distributes a portfolio of healthy, fresh foods, including fresh-cut fruit, fresh-cut vegetables and prepared foods. Those interested in ESG investing may also want to take a look at this company, which publishes annual sustainability reports detailing its ecological balance, environmental soundness and social equity efforts.
Fresh Del Monte Produce Inc. (Tii:FDP)
One of the world’s leading producers, marketers and distributors of fresh fruit and vegetables, this company had a tough quarter. For its second quarter ended June 26, net sales declined nearly 12 percent from the same period last year as a result of global disruptions, including lockdowns, closures and quarantines. However, showing its financial strength, Fresh Del Monte Produce declared a $0.05 dividend for the quarter and reinstated its stock buyback program.
Limoneira Co. (Tii:LMNR)
If you’re looking to make fresh-squeezed lemonade or avocado toast, you’re likely to purchase one of this company’s pickings. Not only is Limoneira one of the largest growers of lemons and avocados in the U.S., the company also owns farmland totaling approximately 1,600 acres used to grow oranges and 1,000 acres for specialty citrus and other crops. Limoneira reported that its retail food and club grocery business has performed significantly better than expectations for its fiscal third quarter ended July 31, 2020. This partially offset the negative impact on its foodservice business, which has suffered from closures of restaurants and bar businesses due to the COVID-19 pandemic.
With household cleansers, frozen foods, condiments and now our fresh fruit and veggies in our cart, check back as we continue to showcase the supermarket brands you can own.
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