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| Date: Tuesday 02nd 2008f December 2008 03:04:44 PM |
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Indigestion At Fresh Del Monte - 11/02/2006 |
| By: Novice Investing Staff |
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There is very little news available for our portfolio pick Fresh Del Monte Produce (FDP). But that does not mean we ignore its horrendous 3rd quarter earning this past week. For the 3rd quarter 2006, Fresh Del Monte reported a loss of 42 cents per share on a 2 percent decline in revenue. To add insult to injury, the company now has suspended its dividend entirely, after cutting the dividend previously. This is a far cry of nearly two years ago when Del Monte was reporting $ 3.20 per share of earnings. |
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| We have basically given up on Fresh Del Monte. Late last year, Fresh Del Monte was exploring options to sell the company to interested parties for as high as $ 1.8 Billion or $ 30.70 per share. With the shares trading at $16 and no update on the possible sale, we think that the probability of a sale is very slim now. Now, with this latest setback, Del Monte will have no catalyst of turning around. First, pricing pressure in EU banana and pineapple will depress earnings for the foreseeable future. Second, if a possible sale is imminent, it will be much lower than the $ 30 per share the company expected late last year. Third, debt has been increasing quite significant and Fresh Del Monte now has a negative net cash of $ 5.63 per share, compared to positive net cash when we first bought it. | |
| With that in mind, we decide to cut our loss and sell Fresh Del Monte Produce (FDP) from our stock portfolio at a this price ( $ 15.24) at a loss, regrettably. We will mark the change on our sample portfolio section immediately. Proceed for the sale will be $ 1051.66. As of now, we have $ 5000.00 of cash which we will use to find 2 other stocks. | |
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| 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 Novell Inc. (NOVL) or any other securities. |
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