Dole (DOLE), is the global leader of fresh fruit and vegetable production.

More than 300 items are sourced and produced in more than 30 different countries. They then go to over 80 countries via retail, wholesale and foodservice channels.

Dole’s stock price is attractive, I believe. The stock could have more upside. Bullish.

Both in terms of brand value and aggregate production, the company is one of its most well-known peers. Dole was IPOed in the summer. According to their F-1 filings, Dole has almost double the production of its nearest peer.

The company owns 109,000 acres and 16 vessels. It also has five manufacturing plants for salad and 162 manufacturing and distribution facilities. (See Insiders’ Hot Stocks on TipRanks)

Even though Dole has been a leader in this industry, there are very few prospects for the industry. A classic example is the fruits and vegetable sector, which has low barriers to entry, slim margins, and very limited growth prospects.

Dole, however, has seen its revenues grow by just over 5 percent per annum over the past fifteen years. Its success was due to both internal growth and smart acquisitions. Dole made more than 100 acquisitions after its 2006 split from Fyffes.

These acquisitions, in particular, have enabled expansion sufficient to increase revenues by more than three times, going from $2.1 Billion in 2006 to $7.1 Billion last year.

Dole is the biggest company in its industry, but its current value is only $1.4 billion or 0.3x annual sales. The industry is characterized by low margins so it’s not surprising that the multiple of P/S is so modest. The company remains profitable and continues to grow slowly.

Dole trades at 9.8x its FY 2021 net income. Fresh Del Monte Produce is a comparable competitor trading at around 14.3 forward P/E. Due to a greater interest in healthier eating and heightened nutritional awareness, the expected increase in produce consumption will be 2.7% annually. This is higher than the 1.9% over the past five years.

Dole has the potential to be an attractive candidate for valuation growth, thanks to its single-digit PE ratio, respectable growth prospects, and predictable business models. While the stock is likely to offer a solid long-term hold, it may also have compelling short-term upside.

Dole appears to have a healthy financial picture with $4.6billion in assets and $3.4billion in liabilities. Dole has $358 million of cash on hand, enough for its daily operations. Long-term debt is $548 million. This amount seems manageable given Dole’s steady profitability and high interest coverage.

Wall Street’s Take

Dole’s Wall Street consensus rating is Moderate Buy. It was based on three Buys (one Hold) and one Sell in the three most recent three months. At $19.60, the average Dole price target implies 28.6% upside potential.

Disclosure: Nikolaos Sismanis didn’t hold any position at the time this article was published.

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