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Sally Jones
Sally Jones
Articles (580) 

Weather Sensitive Crops and Companies – Nuts and Coffee Slide

September 19, 2013 | About:

After a slow macadamia nut season, off 10% from last season according to the U.S. Department of Agriculture, Hawaiian farmers have something to celebrate. Yesterday the USDA lifted the state’s export ban, in place since the early '90s, allowing Hawaiian farmers to export their prized Sharwil avocados to 32 states and Washington, D.C., starting in November. With around 300 coffee farms on the Big Island of Hawaii, this is big news for agricultural producers who mix or "intercrop" avocados, coffee and macadamia orchards on their volcanic soil estates. Selling avocados to the mainland, along with Hawaii’s high-dollar coffee and macadamia nuts, will boost the farmer and Hawaii’s economy, often hard hit by poor weather conditions for sensitive crops.

After a quarter showing zero revenue on macadamia nuts sales at Royal Hawaiian Orchards LP (NNUTU), it’s easy to understand the compensatory high price paid by consumers for some of the world’s most exotic foods and beverages. Like the Big Island’s active volcanoes that could erupt at any moment, the Hawaiian weather is also unpredictable, putting the crops and companies in an almost constant state of risk.

Here’s a look at Hawaii’s largest macadamia producer and a US coffee holding company, both on a 52-week low.

Highlight: Royal Hawaiian Orchards LP (NNUTU)

Down 10% over 12 months, Royal Hawaiian Orchards LP has a market cap of $23.18 million, and trades with a P/B of 0.60.

The current share price is around $3.00, or 26.8% off the 52-week high of $4.10. The yield is 0.70%.

Starting operations in 1986, Royal Hawaiian Orchards LP is the largest grower of premium macadamia nuts on the island of Hawaii. The partnership owns or leases approximately 5,070 tree acres of macadamia nut orchards in three locations within a 50-mile radius on the island of Hawaii.

In August Royal Hawaiian Orchards LP reported a net loss of $1.2 million for the second quarter of 2013. The partnership cited operating losses, no sales revenue from macadamia nuts, and poor weather conditions for growing, according to a company press release.

Guru Action: As of June 30, 2013, there are no guru stakeholders or insider trades to report.

The GuruFocus financial and performance checkup shows warnings: the company’s asset growth is faster than its revenue growth, and it has an inventory buildup. The revenue has been in decline for 12 months. Once good sign is that the NNUTU P/B ratio of 0.60 is close to a 1-year low of 0.58.

Track share pricing, revenue and net income:


Highlight: Coffee Holding Company Inc. (NASDAQ:JVA)

Down 23% over 12 months, Coffee Holding Company Inc. has a market cap of $38.4 million, and trades with a P/E of 21.60 and a P/B of 1.80.

The current share price is around $6.02, or 31.9% off the 52-week high of $8.84. The yield is 1.50%. The GuruFocus financial and performance checkup shows warnings: the company’s gross margin has been in long term decline. The average rate of decline per year is -5.9%. The company has had operating loss over the past 3 years and has issued debt of $1.24 million. Finally, company revenue has declined over 12 months.

Incorporated in 1971, Coffee Holding Company Inc. is an integrated wholesale coffee roaster and dealer in the United States. The company's core products are wholesale green coffee, private label coffee and branded coffee. The company's private label and branded coffee products are sold throughout the United States, Canada and abroad to supermarkets, wholesalers, and individually owned and multi-unit retail customers.

Citing decreasing coffee prices on a four-year slide, the company reported financial results for the three months ended July 31, 2013, with a net loss of $2,108,911,compared to net income of $1,231,196 for the same period in 2012. The company’s net sales were $32,370,692 for the same period, down 27% from a year ago.

Guru Action: As of June 30, 2013, there are no guru stakeholders, but the company president and CEO, Gordon Andrew sold 50,011 shares at $7.01 in two transactions in May 2013.

Here are the insider trading details for JVA.


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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.7/5 (3 votes)


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