While yesterday was generally a decent day for the markets, there were notable exceptions in Smallville, my favorite place that did not participate in the fun.
Agriculture, water rights and land name Limoneira (LMNR) , which recently had eclipsed an 11-year high and was up 50% year to date as well as 15% in the past month, gave some back on Tuesday. It fell 16% following the company's third-quarter earnings release.
While revenue of $40 million exceeded consensus estimates by $2.7 million, earnings of 50 cents a share were five cents short of consensus. That shortfall partly was the result of lower prices for avocados, the quality of which was affected by severe heat late in the quarter.
By contrast, lemon and orange sales were strong. Indeed, Limoneira increased full-year guidance for lemon sales to a range of 3.2 million to 3.4 million cartons at an average price of $25.50 per carton; it previously had put the sales range at 3.1 million to 3.3 million cartons and the average price at $24.50. Although expected avocado sales of 6.3 million pounds are within the company's previous guidance of 6 million to 6.5 million, pricing guidance for the fruit (it is indeed a fruit and not a vegetable) was slashed to $1.04 a pound from $1.30.
Limoneira's drubbing comes at a time when investors have started to take notice of the company; that is one of the downsides of increased awareness. When you seemingly are hitting on all cylinders and trading at an 11-year high, any earnings miss can be devastating. Still, even after yesterday's action, LMNR is still up 25% year to date.
Meanwhile, NL Industries Inc. (NL) , one of my newest positions, was down more than 7% on no news per se, which is par for the course. The culprit here was the 12% pullback by Kronos Worldwide Inc. (KRO) , in which NL has a 30% stake. Kronos produces titanium dioxide pigments, a sometimes-volatile commodity. It now trades at 6.5x next year's consensus earnings estimates and yields 4%, though it should be noted that just three analysts cover the name. Kronos increased the quarterly dividend 13% late last year from 15 cents to 17 cents.
I did use the opportunity to increase my stake in NL yesterday, a position that I'll be building over time rather than going all-in at once (I did not add to Limoneira, as I already have a full plate of agriculture exposure). Admittedly, it was a bit earlier than I'd anticipated adding to NL, but you've got to seize the opportunities, real or perceived, as they present themselves.