Novice Investing - Fresh Del Monte Produce

Date: Thursday 07th 2008f August 2008 01:45:21 PM

Always Refreshing 01/18/2005

By: Hari Wibowo

Fresh Commitment

One of the stock in our sample portfolio, Fresh Del Monte Produce Inc. (FDP), is the leading producer of high quality fresh and packaged produce. Picked in our sample portfolio with future price target of $42.8, it has held steady despite moderate market sell-off. On January 5th 2005, the company reiterates its 20 cents quarterly dividend. At current price, that dividend yields 2.75%; better than average companies in S&P 500.

Fresh Fundamental

Fundamentally, I believe that the fundamental has not changed. FDP is on track to grow revenue at least 5% annually due to favorable trend in the produce industry. With the stellar balance sheet, FDP is poised to weather any downturn in the industry (if there is any). Last time I checked, FDP has a cash of $1.41/share and $0.22/share of long term debt. If FDP can show annual profit of $2-$3/share for two years while keeping the profit in the bank, it will soon have $7/share of cash in the balance sheet. I believe the trend in the produce industry favors FDP and $7/share of cash in a couple of years is very doable.

Fresh Conclusion

Fresh Del Monte is a solid company with a potential target price of $42.8/share. Now, it is not going to give investors the thrill of quadrupling their money in six months, but it will give investors decent return with relatively low risk.

Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Fresh Del Monte Produce Inc. (FDP) or other securities.

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