Has Dole Food Company, Inc. (DOLE) Become the Perfect Stock? – Fresh Del Monte Produce Inc (FDP), Chiquita Brands International, Inc. (CQB)

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Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

Dole Food Company, Inc. (NYSE:DOLE)One thing’s for sure: You’ll never discover truly great investments unless you actively look for them. Let’s discuss the ideal qualities of a perfect stock and then decide whether Dole Food Company, Inc. (NYSE:DOLE) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it’s certainly a better sign than a stagnant top line.
Margins. Higher sales mean nothing if a company can’t produce profits from them. Strong margins ensure that company can turn revenue into profit.
Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management’s attention. Companies with strong balance sheets don’t have to worry about the distraction of debt.
Moneymaking opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
Valuation. You can’t afford to pay too much for even the best companies. By using normalized figures, you can see how a stock’s simple earnings multiple fits into a longer-term context.
Dividends. For tangible proof of profits, a check to shareholders every three months can’t be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let’s take a closer look at Dole Food Company, Inc. (NYSE:DOLE).

Factor What We Want to See Actual Pass or Fail?
Growth 5-year annual revenue growth > 15% (9%) Fail
1-year revenue growth > 12% (11.1%) Fail
Margins Gross margin > 35% 8.7% Fail
Net margin > 15% (3.4%) Fail
Balance sheet Debt to equity < 50% 237.8% Fail
Current ratio > 1.3 1.86 Pass
Opportunities Return on equity > 15% 0.2% Fail
Valuation Normalized P/E < 20 31.03 Fail
Dividends Current yield > 2% 0% Fail
5-year dividend growth > 10% 0% Fail
Total score 1 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Dole Food last year, the company has seen its score cut in half. A big drop in net income has sent the company’s normalized earnings multiple climbing much higher despite the stock’s breakeven performance over the past year.

Dole Food Company, Inc. (NYSE:DOLE) is a major player in the fruit industry, with a combination of packaged foods and fresh-fruit offerings. Over the years, that industry has been a tough one to reap profits from, as razor-thin margins even in the best of times define this commoditized business. Rival Fresh Del Monte Produce Inc (NYSE:FDP) has managed to stay profitable, but both Dole and banana-giant Chiquita Brands International, Inc. (NYSE:CQB) have suffered bouts of losing quarters.

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