Should Recent IPO Dole plc be in Your Portfolio?

Dole plc in Dublin, Ireland, produces, distributes, and sells fresh produce, health foods, and consumer goods internationally. The company made its NYSE debut on July 30, 2021. The IPO marked the completion of its merger with Total Produce and the establishment of the largest fresh produce company in the world. However, the stock…

retreated more than 9% on its stock market debut and is down 0.5% over the past five days.

DOLE (DOLE – Get Rating) plans to use the $400 million gross proceeds from the IPO to repay debt and fund the merger costs.

As the company continues to focus on expanding its business by increasing its organic produce and taking advantage of Total Produce’s strong market presence in Europe, it is well-positioned to capitalize on the growing farm produce industry. However, COVID-19 related supply chain challenges, volatility in commodity food prices, and its substantial debt burden could limit its growth.

Here is what we think could influence DOLE’s performance in the coming months:

Potential Business Risks

The COVID-19 pandemic continues to pose a considerable risk to the fresh produce industry. The rapid spread of the highly contagious Delta variant has resulted in new restrictions across the United States and Europe. This could apply unprecedented stress on the food supply chain and cause the closure of farm production facilities. DOLE’s business could be negatively impacted by the supply chain stress.

Furthermore, risks related to adverse weather conditions, increasing raw product costs, product contamination, and servicing its substantial debt burden could adversely affect DOLE’s business.

Favorable Growth Drivers

With operations spread across the North American and European fresh fruits and vegetable markets, DOLE’s diverse product offering should allow it to reach a broad global consumer base and cater to the increasing demand all year round. In addition, sustainable consumption and growing consumer interest in  health and wellness should enable DOLE to generate  higher growth in product categories such as berries, avocados, organic produce, and value-added salads. Also,  with more than…

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