We padded the stake in Fresh Del Monte Produce Inc. (FDP) at $23.21 in February, and the stock was up to $25.91 by the end of March. The organization’s turnaround has pro­gressed nicely since this outfit was first purchased in mid-2022, notes Philip MacKeller, editor of Contra the Heard.

Sales have stabilized, margins have climbed, and debt has dropped materially. The div­idend has been boosted for the second consecutive year. It is currently yielding 4%.

Fresh Del Monte Produce Inc. (FDP)
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Yet the market has not recognized these achievements. The stock is not trading much higher than the original pur­chase price, and the valuation is at its lowest level in a decade. It is hard to get overly optimistic about any particular stock. But there is a strong bullish argument for FDP, especially as private equity firms have considered taking it out in the recent past.

The outlook calls for higher margins and capex in 2024. It would also be reasonable for in­vestors to expect continued flubs among the ana­lyst community when it comes to forecasting quarterly results — their track record here is truly terrible. Opportunities could crop up for those look­ing to buy on the cheap, as happened in February.

Recommended Action: Buy FDP.

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