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Australian Investment Blog

ASX:CGC 05/03/2019

Reporting Season Wrap: Food Sector

A mixed trolley through February reporting for the food sector however M&A activity is heating up. This is typical when highly cyclical stocks decline on the back of shorter term transient factors like weather. Key points:

  • Costa Group (ASX:CGC) downgraded in January due to weak prices for berries, tomatoes and avocados rather than structural issues – the 40% decline in share price was aggressive
  • Cattle company Australian Agricultural (ASX:AAC) has been hit from QLD floods - the share price is more than 40% below the years high
  • Graincorp (ASX:GNC) received a takeover bid in December when its share price was low while RuralCo (ASX:RHL) received one this week from Nutrien and shares rallied 45%
MM take: Buying structurally sound companies into cyclical weakness can yield good results. This week we added Costa to the Growth Portfolio Costa Group (ASX:CGX) Chart Costa Group (CGX)

By Harry Watt
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