The Costa Group Holdings Ltd (ASX: CGC) share price has continued its strong run and is up 6.5% to an all-time high of $5.59 in late morning trade.
This brings the horticulture company's year-to-date return to in excess of 62%.
Why are its shares higher?
With no news out of Australia's leading grower, packer, and marketer of fresh fruit and vegetables, today's gain is likely to be related to a positive broker note out of Ord Minnett.
According to the note, Ord Minnett has upgraded Costa Group's shares from lighten to a hold rating with an increased price target of $5.01.
The broker expects the company to benefit from higher citrus export pricing, offsetting any weakness from its berry exports.
Should you invest?
Whilst it is good to see a broker turn positive on a company, I am a little surprised by its move higher today considering the price target and hold rating.
Although I am a big fan of the company, I'm not a fan of its current valuation.
At 27x earnings I think Costa Group is a little expensive considering its current growth profile. In FY 2018 management expects profit growth of circa 10%, which I don't believe justifies the premium its shares trade at.
In light of this, I plan to avoid the company and take a look at other consumer staples shares such as Tassal Group Limited (ASX: TGR) and Treasury Wine Estates Ltd (ASX: TWE).