Today we cover the fourth and final Rock Your Stock featured portfolio. It’s called the fruit basket because each of the stocks in the portfolio either has a fruit in the name or is somehow related to fruit. While it’s meant to be funny, we believe each of the stocks chosen make good investments long-term. May the fruit be with you!
Here, in bullet format, are the 10 companies that comprise the fruit basket. I’ve cut the post in two. The second half will come later this afternoon.
Apple Inc. (AAPL)
The first stock in our portfolio is an obvious choice. Who doesn’t love apples? For that matter, who doesn’t love Apple? They are business innovators, constantly reinventing themselves and in the process making loads of profit. Their entry into retailing in 2001 simultaneously shook up both the computer and retail industries for the better. Their stores are sleek, modern selling machines. They pull you into the store to experience the Apple difference. More than plenty end up buying an Apple product of one sort or another. In 2001, the company had $19 million in retail sales. Five years later, they finished the fiscal year with $3.3 billion in retail stores. Add in the iPod and other gadgets and it’s no wonder the stock trades at a 52-week high.
Chiquita Brands (CQB)
Remember the ditty “Chiquita Banana and I’m here to stay?” Chiquita Brands have been the world’s largest banana supplier it would seem forever. However, they are now much more. In 2005, the company paid $855 million to buy Fresh Express, America’s leading supplier of packaged salads and in 2006, they brought out the Fruit Smoothie line of drinks, a natural given the company’s history marketing fresh fruit. The current CEO is rebuilding the business, moving it away from it’s reliance on banana’s, a good move in our opinion. The first quarter report wasn’t pretty but most of the expense was a result of an unusual Arizona freeze that raised the price of lettuce significantly. If you read a piece by Business Week in early May, you’ll see there is value here.
Del Monte Foods (DLM)
When I was a kid, I used to love Del Monte’s fruit cocktail. I don’t eat canned fruit so much these days, with the exception of apple sauce, but I do know they are a player in the canned fruit business. Apparently, they too have decided to broaden their scope and move away from their roots. In the last four years the company has bought Starkist, 9 Lives, Meow Mix, Kibbles N’ Bits and Milk Bone among others. It appears diversification is important in the food business, just like investing. The company expects sales growth in the mid-teens in 2007 with integrations costs from acquisitions hurting earnings in the short-term. Long-term, the company looks ideally positioned for growth.
Hansen Natural Corp. (HANS)
Anyone who watches Jim Cramer and Mad Money probably knows about the Hansen story. Once a slow growing juice and soda company, in 2002 it came out with Monster, the 16-ounce energy drink in the black can that now is number two in the industry, trailing only Red Bull, the undisputed world leader. Hansen is now in partnership with Anheuser Busch and Pepsi, who will distribute the product in the United States and Canada respectively. The stock’s meteoric rise has come to a halt for now. They missed earnings by a small margin in the first quarter, but make no mistake, they’re gunning to be #1 and I see no reason with the partners they have that they won’t supplant Red Bull.
Jamba Juice Inc. (JMBA)
Jamba Juice is a player in the made-to-order fruit smoothie business. Currently with 620 stores across the United States, management plan to open another 400 or so in the next three years, while at the same time improving store operations, growing comparable store sales with higher margins, producing greater returns for shareholders. Jamba was a private company until March 2006 when Service Acquisition Corp. bought it for $265 million less debt. They subsequently changed the public company’s name to Jamba Juice Inc. The latest year-end results were rather mediocre but that will change once management has finished with its makeover at the store level. The bottom line: healthy drinks aren’t going away.
That’s the end of the first post. I’ll have the second for you later. Thanks.
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