Smashed Avocado and Costa Group

Smashed Avocado on toast is pretty good and so is smashed Costa Group

Costa Group (CGC) is Australia’s largest grower, packer and marketer of fresh fruit and veggies. Most of us would eat something that they have handled each and every day. This is not some fly by night company either with its origins dating back to the early 1900s. Costa Group knows fruit and veg like no other.

Costa Group

Costa Group shares have been flogged over the past 12 months with the stock down around 54%.

These are the major reasons why

  • adverse conditions during the Moroccan blueberry season
  • lower than expected mushroom demand
  • raspberry quality not up to scratch
  • high cost of water for their citrus operation plus a fruit fly problem at their Impi farm

Even with all of the negatives hitting the business it still managed to pump out a half yearly profit of around $40mil.

What about the future?

CGC has said the citrus season is shaping up to be a good one. Berries, tomatoes and avocados are also trading very favourably at present. So yes, there is a mixed bag of fortunes for the group at the moment which is why there is an opportunity to buy the stock on the cheap. If all divisions were firing then CGC would be back above $7.00. The stock currently trades on a modest FY20 PE of 14 times.

Here is the mix; the company is nicely diversified amongst different categories and regions.

Produce revenue split

There is a big push on the population eating healthier so we know demand for fruit/veg is only going to go one way – and that is UP.

A healthy choice for your portfolio; BUY last sale $3.28


It's only fair to share...Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn

General Advice Warning
The information provided in this post is general information only. Unless otherwise stated the information is not designed for the purpose of providing personal, financial or investment advice. Any examples are presented for illustration purposes and past performance is not a reliable indicator of future performance. The information provided does not take into account your particular investment objectives, financial situation or investment needs.

Without limiting the generality of the above paragraph no person, persons or organisation should invest monies or take action on the reliance of the material contained in this post, but instead should satisfy themselves independently (whether by expert advice or otherwise) of the appropriateness of any such action. Unless otherwise stated the information presented is not a recommendation to invest in any investments, securities or financial products.

This service, like all other financial services, is subject to market forces and unpredictable events that may adversely affect its future performance.Whilst all care has been taken in compiling information in this post, and is provided in good faith, it is not to be relied upon as a substitute for professional advice. The views expressed are commentary only and the writer accepts no responsibility for the accuracy, completeness or timeliness of the information.

Super Equity Pty Ltd ACN 609 373 202 is a Corporate Authorised Representative 001238425 of ANDIKA Pty Ltd AFSL 297069It should also be noted that references and hyperlinks to any third party information (including, but not limited to: news articles, blogs, reports, videos or other mediums of information) is not an endorsement of that party or product.