With a third of 2022 under our belt, the S&P 500 is down 13% year to date. Perhaps even more interesting, the index is now in negative territory over the past 12 months (down 0.4%). Market volatility also has been pronounced, at least as judged by my favorite measure -- trading days that the S&P 500 has moved up or down at least 1%. So far in the 85 trading days of 2022, there have been 42 volatile days, nearly a 50% hit rate.
Eighteen of those volatile days have been on the positive side, while 24 have been negative. There have been 12 days of moves greater than 2% (split evenly between up and down) and just one in excess of 3% (last Friday's 3.63% decline). Overall, we've gotten off pretty easy in terms of volatility under the circumstances. Every so often I re-read my analysis of the fourth quarter of 2008 for perspective. It is worth reviewing that period of market history for perspective on volatility.
Meanwhile, I continue to look for dumpster-diving opportunities, where it appears that the market may have overly punished certain names. This can be dangerous; no matter how low a stock goes, it can always go lower (to 0, anyway).
That brings me to looking for down-and-out agriculture names, a potentially interesting place given the specter of food shortages ahead. Over the past year, that area has been decent performance for names I hold: Alico (ALCO) (up 30%), Cresud (CRESY) (up 33%) and JG Boswell (BWEL) (up 32%). And I would not mind opportunistically adding to that group.
I've never owned Dole plc (DOLE) , but I see that shares are down 8% year to date and currently trade at about 7.5x 2023 consensus earnings estimates. There is a decent amount of debt on the books, $1.36 billion as of last Dec. 31, along with $257 million in cash and short-term investments. Dole went public last July at $15 a share, rose as high as $17.66 (intraday), and closed Tuesday at $12.21. Dole yields 2.62%.
Also new to me, Fresh Del Monte Products (FDP) is down 8% year to date and trades at about 13x 2023 consensus estimates (with just two analysts covering the company). Fresh Del Monte is light on cash, with just $16 million at year-end, and heavier on debt, with $529 million. It currently yields about 2.4%.
Limoneira Co. (LMNR) is a familiar name to me, so much so that when I first owned shares it traded on the pink sheets. Then in 2010, Limoneira split its shares 10 for 1 and listed on the Nasdaq. I simply got bored with it over the years and closed the position a few years back in the $18 range.
Last summer I considered taking a new position in Limoneira -- it was trading around $16.50 at the time -- and am glad I passed. Limoneira shares closed at $11.17 on Tuesday and are down 40% over the past year and 25.5% year to date. While Limoneira currently yields 2.69%, the company has not been profitable the past two quarters. Its shares currently trade at 43x 2023 consensus estimates (surprisingly, there are five analysts covering the stock). LMNR has always traded rich relative to earnings due to the presumption that it is an asset play (land and water rights). The company ended 2021 with $5.7 million in cash and $147 million in debt.
While $11 is somewhat enticing for Limoneira, I'd like to pick up shares a bit cheaper if the opportunity is presented.
