The Turnaround Letter Editor George Putnam likes the chances for this low-priced produce icon.
“Chiquita (CQB) has many of the features that we like to see in a turnaround candidate. First and foremost, it has a powerful brand. The Chiquita brand dominates the banana market, and it is probably the most widely-recognized name in any form of fresh produce. Moreover, the banana and fresh produce markets are likely to remain strong as consumers around the globe become more health conscious.
“Second, Chiquita has a new CEO. In late 2012 the company brought in Edward Lonergan. Prior to coming to Chiquita, Lonergan led the turnaround of a cleaning products company. Before that he had a distinguished career in branded consumer products with Gillette and Proctor & Gamble.
“Even before Lonergan arrived, the company had begun to restructure its operations. It sold off a number of non-core businesses – another thing we like to see – to focus on bananas and salads & healthy snacks. It moved its headquarters, reduced headcount and realigned management to reduce costs and improve efficiencies.
“In February of this year Chiquita refinanced much of its balance sheet, pushing the bulk of its debt maturities out to 2021. This gives the company plenty of breathing room to carry out its restructuring plans.
“While there is risk in any agricultural product business, we believe that the current stock price represents an attractive level to get into a company with a dominant brand that appears to be well into a turnaround. We recommend buying Chiquita up to 12.”
—George Putnam, III, The Turnaround Letter, April 2013