CVGW: Hanging by a thread
The Equity Dispatch #46
Thanks to a non-binding offer for the company from an undisclosed buyer, Calavo Growers’ (NASDAQ: CVGW) stock has only slightly under-performed the market since we first wrote about the company in early December 2024. The share price of this provider of avocados and other fruits has not, in the face of impending tariffs and threats to what is probably an undocumented migrant workforce of avocado and tomato picker/packers in the U.S., collapsed.
The troubles this company is facing are not going away. We expect lower sales and lower profits, which are likely to impact the share price, among other things by inducing the potential offeror to walk away or revise its offer price.
A sales and profit decline for CVGW, based on past performance, would be terrible for the stock. Except for the most recent reported period, Calavo sales have declined overall since 2019, as has gross profit. Over the past five years, the stock’s price performance has been a disaster.
