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Fresh Del Monte Produce Inc. (NYSE:FDP), which is in the food business, and is based in Cayman Islands, saw a decent share price growth in the teens level on the NYSE over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Fresh Del Monte Produce’s outlook and valuation to see if the opportunity still exists.
What's the opportunity in Fresh Del Monte Produce?
Great news for investors – Fresh Del Monte Produce is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $36.82, but it is currently trading at US$27.71 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Fresh Del Monte Produce’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of Fresh Del Monte Produce look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted revenue growth of 10.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Fresh Del Monte Produce, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since FDP is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on FDP for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FDP. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Fresh Del Monte Produce. You can find everything you need to know about Fresh Del Monte Produce in the latest infographic research report. If you are no longer interested in Fresh Del Monte Produce, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.