Thinking about everyone’s favourite berry company.

We’ve written a lot of negative notes on Costa, over time, which is often what we do when we are trying to turn an investment case on its head.

Here’s a more positively inclined take.

Costa (CGC) has enjoyed periods of fairly wild exuberance in the past (note that 2018 period of market cap relative to asset base), but is now going the other way. Recent acquisitions bolstered the asset base, but market placing (relatively) little value to this enlarged base.


They don’t struggle to generate sales growth…


…[not that our ARIMA model knows what to do with it, other than extrapolate the trend and adjust for seasonality]…


…but profitable growth has been harder to come by, and requires lots of capex. Operating cashflow is quite reasonable, otherwise, and there’s that positive ag thematic…


…weather, vagaries of crops (virus, bacteria, whatever can ruin a harvest) make forecasting pretty hard.


But netting it all out, the embedded growth assumptions don’t seem too arduous, despite an otherwise high seeming headline multiple (e.g. 18x forward).


And there is modest insider activity


File under unsure, but very interesting, and not an unreasonable tilt for our higher risk, higher returning absolute focused funds.

In a disagreement between market value, and book value, the market is usually right. But still interesting, after a torrid few years, particularly in context of my $20 a day berry habit.

Daily dose of blueberries, strawberries and raspberries on yoghurt is a thing when you are over 30.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.