Are Guacamole Profits Worth 1.5 Times iPhone Profits?

Americans are falling in love with avocados, so says the Wall Street Journal and my gut. They’re healthy, they’re tasty. They even make your hair shiny and beautiful, according to a commenter on the Journal story, extolling avocados’ virtues.

And this food trend is tradable because there’s a publicly-traded avocado company, Calavo Growers (CVGW). A former co-op, the California company is the largest marketer of avocado products in the U.S.

CVGW Chart

CVGW data by YCharts

Calavo sells avocados to “a diverse group of supermarket chains, wholesalers, food service and other distributors.” It had $522.5 million in revenues last fiscal year (ended last October), up 31%. Last quarter it made $5.6 million on $153 million in sales.

CVGW Revenue TTM Chart

CVGW Revenue TTM data by YCharts

While based in the competitive California market, where nine major avocado handlers vie for business, it has a diversified supply with fruits also coming from Mexico, Chile, Peru, New Zealand and the Dominican Republic.

Mexico has an avocado harvest larger than California’s, and Cavalo’s all over it. The company figures it packed and distributed almost a quarter of Mexican avocados last year that made it to the U.S., and it 5% of the Mexican avocados that went to other countries.

It’s also up on all the latest avocado technology. The company has a proprietary ProRipeVIP avocado ripening program, which uses an acoustic firmness sensor to measure the firmness of fruit and deliver evenly-ripened avocados. Its filing also mentions it’s developed display techniques and packages that appeal particularly to impulse buyers. (Shoppers, it says, buy more avocados when they’re bagged.)

Calavo confirms it: we’re falling for avocados. Over the last decade, it says in its most recent annual filing, consumption here has grown at a compound annual growth rate of 7%. And it adds something the Journal didn’t mention: the Hispanic community, currently 16% of the U.S. population, is expected to triple by 2050. Everyone’s going to be eating more avocados.

Unfortunately for investors looking to buy into this trend, it’s a bit pricey.

CVGW PE Ratio Chart

CVGW PE Ratio data by YCharts

When it comes to earnings, you pay more for avocados than you do for Apple (AAPL).

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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