Calavo Growers (CVGW) Presents Attractive Buying Opportunity

(RTTNews) - We believe that Calavo Growers, Inc. (CVGW) is attractively priced at current levels and has at least 15% upside from here. Calavo Growers is engaged in marketing and distributing avocados and other perishable foods. It procures avocados principally from California and Mexico.

With President Trump's proposal to impose a 20% tariff on imported Mexican goods, the stock has weakened. However, the U.S. appetite for avocados remains undiminished. So, we see this temporary weakness in CVGW as a buying opportunity.

For the most recent fourth quarter, the company reported net income and revenue that topped estimates, as well as year-ago numbers.

Q4 Net income rose to $9.2 million or $0.53 per share, from year-ago $4.8 million, or $0.28 per share, while revenues increased by over 19% to $247.7 million—also a new final-period record. Analysts were modeling earnings of $0.48 per share on revenue of $226.55 million.

Looking ahead to FY17, Calavo Growers anticipates revenue growth to accelerate to an even higher rate than achieved in fiscal 2016. For FY16, net sales rose 9% to a record $935.7 million from $856.8 million in the previous year.

The stock featured on our premium product Short-Term Investor on Dec 20, 2016 at an opening price of $59.15, and returned a gain of 13% from our published price in just two trading sessions. Earlier, the stock featured on Short-Term Investor on June 6, 2016 at $56.78 and touched a new intra-day high of $71.48 on September 9, 2016, returning a gain of 26% from our published price.