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Chipotle and the Great Avocado Scare

Calavo Growers (CVGW), a global leader in procuring and marketing avocados (the company owns 12% of Limoneira and markets the avocados grown by the company), has added fuel to the avocado fire.

The same day that Chipotle's warning hit the news, Calavo released results for its fiscal first quarter ended on Jan 31. While the company boasted of growing demand for avocados, it also warned that that California's avocado crop may be half of what it was in 2013.

Not to worry, though, the company expects to fill the hole left by reduced production in California with Mexican-grown avocados.


CVGW Chart CVGW data by YCharts

As it turns out, the avocado scare appears to be real, at least for those grown domestically, and prices will likely be higher in 2014.

Chipotle may indeed have to raise menu prices to compensate, but don't fear avocado afficianados -- it is highly unlikely that Chipotle will discontinue guacamole from the menu.

At the time of publication, Heller was long Limoneira.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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