In 2005, Calavo and Limoneira executed a cross-equity agreement, in which Calavo acquired a 15.1% stake in Limoneira, and Limoneira became Calavo's second largest shareholder with a 6.9% stake. They continue to hold ownership interests in each other to this day, although Limoneira has somewhat reduced its stake in Calavo over the years.
Other than its stake in Limoneira, Calavo may not be much of an asset play, but it has been putting up some decent numbers. Yesterday, the company announced fourth quarter earnings of 42 cents per share, which exceeded consensus estimates by two cents. Calavo currently trades for about 25 times trailing earnings and 16 times 2013 consensus estimates. The company also yields 2.6%, and its annual dividend, currently at 65 cents per share, has been growing; more than tripling over the past ten years.
I've got to admit I am not a big fan of avocados, but that seems to put me in the minority; certainly in our household. I'd venture to say however, that many investors were unaware that they could actually get investment exposure to the strange, green fruit. At least I think it's a fruit.....
I'll explore additional small agriculture plays in future columns.At the time of publication the author is long LMNR. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.`
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