One of the best performing blue-chips on the local market this year has been the Costa Group Holdings Ltd (ASX: CGC) share price.
Year-to-date the horticulture company's shares are up an impressive 93%.
Can they go higher?
According to one leading broker they could still go higher from here.
A research note out of the equities desk of Macquarie this morning reveals that its analysts have upgraded Costa Group from neutral to an outperform rating
Furthermore, the broker has increased the price target on its shares up to $7.00.
The broker has made this move following the company's decision to increase its shareholding in its African Blue joint venture.
African Blue is a Moroccan-based blueberry partnership between the company, Agrogailes, and Total Berry. It increased its holding in the joint venture to 90% for $68 million late last week.
Macquarie believes there is a chance that this deal could lead to an earnings upgrade at its annual general meeting in Melbourne on November 16.
Previous guidance, set at its full-year results in August, is for full-year profit growth of 10% in FY 2018.
Should you invest?
While I think that Costa is a quality company, I just can't justify an investment at the current share price.
With its shares changing hands at 33x trailing earnings, I think Costa is a little on the expensive side considering its guidance for the year ahead.
Should its shares come down to a more reasonable valuation I would jump at the chance to buy them, but for now I plan to keep them on my watchlist and consider investments in fellow food shares Tassal Group Limited (ASX: TGR) and Huon Aquaculture Group Ltd (ASX: HUO).
