I might be going nuts, but Select Harvests Limited (ASX: SHV) is still a buy.
You read that correctly. Despite its 272% return in 2013 and its subsequent 30% run so far this year, I believe the stock still represents a good buy today.
When the almond producer announced its interim results last month for the period ending 31 December, it reported a 1.97% increase in revenue of $100.7 million as well as a whopping 118% increase in underlying net profit of $8.4 million. Operating cash flow also increased by 103% to $23.5 million.
The result was driven by a focus on improving yields and reducing costs while also improving performance across the business. The company is also benefiting from higher global almond prices. The higher prices are a result of the drought currently affecting California where 80% of the world’s almonds are produced.
This is ideal timing for Select Harvests given that its orchards are at a prime stage of growth. Furthermore, a falling Aussie dollar will also make its products more appealing to international markets which should see demand increase in the near future.
Although the share price has risen considerably, Select Harvests still presents as an attractive opportunity today. With shares currently trading at $7.03, the small-cap superstar is trading on a P/E ratio of 13 times and boasts a market capitalisation of $413 million.