Limoneira has impressive land and water rights that are understated on its balance sheet.
Limoneira’s Harvest real estate project is moving along nicely and management continues to expect to realize cash flows of $100M-$130 over the next 7-10 years.
Agribusiness investments are beginning to pay off and will boost top and bottom line growth.
President Trump’s proposed corporate tax cuts and tariff on Mexican imports would benefit Limoneira, while deportations would greatly hurt. Overall, I’m cautiously optimistic he is a positive development for Limoneira.
Limoneira’s sell-off due to disappointing guidance is shortsighted. It is a buy at its current price, but I caution against going overweight due to the risks of the business.
Limoneira (NASDAQ:LMNR) is a microcap (market cap = $241.8M; enterprise value = $346.1M) 125-year-old agribusiness company based in Santa Paula, California. Although Limoneira’s market cap is small by stock market standards, it is one of the largest lemon and avocado suppliers in the U.S.
Though Limoneira seemingly trades at high multiples (TTM P/E 32.7, forward P/E 42.5, P/B of 1.9), I believe it to be one of the cheapest stocks on the market. This is because the true value of Limoneira’s land and water rights in Southern California and Arizona is grossly underestimated on their balance sheet due to the practice of carrying land holdings on the books for the purchase price, rather than the current market price.
Additionally, beginning this year, Limoneira will start to benefit from a number projects and investments that have been in the works for years, including their massive Harvest real estate development, efficiencies gained from their new lemon packing plant, trees becoming fruit bearing, and the potential benefits of a tariff on Mexican goods and lower taxes on corporate profits earned in the U.S. Though Limoneira’s shares have struggled since their IPO 2010, I believe these catalysts have shares primed for a move upward, and I rate the stock a buy at its current price ($17.01).
source: Seeking Alpha