Will These Companies Make Your Portfolio Go Bananas? – Dole Food Company, Inc. (DOLE), Chiquita Brands International, Inc. (CQB)

While looking back at 2012 leaves little to be excited about, the company does appear to have an attractive 2013 on the docket. For the coming year, Chiquita expects greater U.S. market share for its banana business as it has secured new contracts. The continued press into private-label items appears to be paying off, as a new grocer contract began shipments in the early months of this year.

Chiquita will continue to consolidate its business lines, abandoning non-core products and streamlining operations at plants around the world.

So how does the company look compared with its chief competitor, Dole Food Company, Inc. (NYSE:DOLE) ?

Comps, valuation, and the call
The company’s easiest comp is Dole, which is a much bigger company but operates in largely the same business. Dole had a successful 2012, with the stock price rising around 35% for the year. The company has a much richer valuation than Chiquita, though this is likely due to its more favorable position in the market. Dole Food Company, Inc. (NYSE:DOLE) has grown its business lines and added products such as Smoothie Shakers in the frozen aisles that should trend well with health-conscious, quick-eaters. The  company recently completed the sale of its Asian division to Japanese company ITOCHU for $1.685 billion in cash.

At this point, Dole looks like a more stable business with predictable growth going forward. That is why it trades at 11.8 times forward earnings, compared with Chiquita’s 6.86. Dole Food Company, Inc. (NYSE:DOLE) has an EV/EBITDA ratio of 9.24, while Chiquita is actually more expensive at over 11.

The pricing pressure for bananas, in my opinion, will remain a challenge for both companies. Dole is further along in its consolidation process, and the evidence may already be baked into the stock price. Chiquita has more risk, but more room to run on the stock market. For the risk-averse, I would go with Dole Food Company, Inc. (NYSE:DOLE). For those up for the challenge, Chiquita Brands International, Inc. (NYSE:CQB) could offer more substantial capital appreciation in coming years.

The article Will These Companies Make Your Portfolio Go Bananas? originally appeared on Fool.com and is written by Michael Lewis.

Fool contributor Michael Lewis and The Motley Fool have no position in any of the stocks mentioned.

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