Tuesday, December 13, 2005

A Tasty Stock Buy—FDP

Last Friday, the share price of the world's top pineapple producer, Fresh Del Monte Produce Inc., sank to a new 52-week low as the company lowered it 2005 profit forecast on lower demand and growing competition from Japan, Korea and the Philippines. However, the company still expects 2005 earnings to range between $1.90 to $2.00 per share, compared with its earlier guidance of $2.30 to $2.40 per share and continues to project higher year-over-year sales for 2005

At a price of $23.17 and a price earnings ratio between 11 and 12, I think this stock represents a buying opportunity. The fact that the company also expects to pay an annual dividend $0.80 per share, or 3.5 percent, is also a significant benefit to the potential stockholder. Fresh Del Monte’s depressing news also dragged down shares of banana producer Chiquita Brands International, Inc., which saw its stock fall to a new 52-week low Friday morning. Chiquita's shares fell 26 cents to $19.54 in afternoon trading, and earlier hit a new year low of $19.25. I think Chiquita also represents a tasty stock buy.

I do not currently own either stock but I am following both like a vulture follows its prey. As soon as I think that FDP has bottomed out, I am a buyer.


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