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Motley Fool Hidden Gems / HGS: Fresh Del Monte


Subject:  Selling my stake Date:  7/8/2004  1:14 PM
Author:  Klingsor4 Number:  1379 of 2234

In the last newsletter Tom wrote that if after all the analysis you still don't feel comfortable with an investment, sell it. Well I've gotten to that point with FDP. After all the dividends were paid out my entry point was right around $25, so today I sold at a slight profit. That compares faborably to the money I would have lost had I invested in an index fund. However, if things look like they're improving or if Tom's review in two weeks is a glowing one that answers these concerns, I might consider coming back in.

Here are my concerns:

- With fuel price increases FDP is bound to be squeezed even further. Even if they hedge their bets on future fuel purchases that's still an additional cost. Although this has been a concern for some time now and the stock has recovered admirably, it's just not my cup of tea.

- I'm just not seeing any FDP pineapples around. I've looked everywhere where I've seen pineapples both in the South and here in the NorthEast and predominantly these are Dole pineapples. Costco carries Dole pineapples and my local grocery stores carry some even less-known brand. No Del Monte Gold anywhere.

- Analysts have written that the competitive advantage of the Sweet Gold pineapple will deteriorate as more companies produce a similar strand. I can't comment much on that but it seems like a credible threat and one that will seriously hurt FDP.

- Pineapples and bananas aren't too high on the low-carb diets list. Thus, it's thus quite possible that the whole fresh-cut fruit trend may very well bypass the main staples of FDPs products.

I understand what a deep value FDP is but I'm just not comfortable with the growth prospects, especially when there are companies like TACT, SCSS and BWLD around. If the price drops further I may consider getting in again due to the beefy dividend, but for now I'm out.

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