Friday Addition- A Random Walk

This morning I am just taking a walk through the markets kicking tires and turning over rocks in the constant search for opportunities. Rather than bore you with more data from the Fed (as important as that is in the weird world in which we are living) or discussions of conditions in the banking industry right now, I thought I would just share a few ideas I have been tracking that are probably worth accumulating no matter what the markets do over the rest of the year.

Alico (ALCO) owns something that is in very high demand right now. They have about 100,000 acres of land, mostly right here in Southwest Florida. Almost half of the properties are used for citrus crops, the biggest being oranges. Most of the crop is sold to Tropicana for the not from concentrate fresh juice market.

They also own over 50,000 acres of land that they lease for cattle grazing, recreational hunting, farming lease, mining, and conservation. They have been steadily selling parcels to the state government for conservation purposes. So far, Florida has bought 22,000 acres from Alico.

All told, Alico has sold more than $86 worth of land over the last 3 years.

They have been using that cash, along with cash generated from the citrus business, to increase the dividend, buyback stock, and reduce debt.

They have also been buying more orange groves as they recently bought 3,300 additional contiguous orange grove acres. They have just resigned a long-term deal with Tropicana, so the orange juice business should continue to produce cash for years.

This is not a flashy get-rich overnight stock. Alico is going to continue selling land for conservation, and I suspect that at some point, the prices will be too attractive not to start selling for development. That money, along with the cash produced by the citrus business, will be used to pay dividends, buy back stock and reduce debt. All of these actions increase shareholder value.

Buy a little more every time there is market disruption for some reason or another. Reinvest the dividends and just let time do its thing.

If inflation does break out of its cage next year, land prices could escalate quickly, driving the stock much higher much faster than anticipated.

I will also point out that after a long period of being relativity quiet, Alico has been doing a lot of roadshows over the past year to drum up investor interest.

Golar LNG (GLNG) shares continue to trade at a massive discount to any reasonable estimate of the assets that they own. B. Riley analysts put the value at $20.50 a share while the estimate out of Stifel is $24.

Golar is now better positioned to focus on its Floating Liquid Natural Gas (FLNG)business. The board is also talking about possibly separating the upstream FLNG business from the midstream shipping business if the outlook and pricing in shipping continue to improve.

The sudden resignation of the CEO recently is troubling, but the analysts seem to agree that it is not a negative development.

Golar is not without risks, but the assets are on sale, and it is only going to take a hint of good news for the shares to jump higher.

Finally, I saw that there had been a CEO change at AgroFresh Solutions (AGFS) recently. AgroFresh is an interesting business. They provide science-based technologies that extend the shelf life of fresh produce. AgroFresh used to be a wholly-owned subsidiary of Dow Chemical, and Dow still owns more than 40% of the company.

A refresh is going business in more than 50 countries around the world.

The patent portfolio of over 500 granted and applied for patents is not even vaguely factored into the current stock price, in my opinion.

Reducing food waste is a big deal in today's world. Agrofresh Products can help achieve that goal. This could and should turn into a high-growth stock over the next few years.

Rumor has it that the CEO change is Dow putting someone in the seat that can make that happen.

I don't know that I would bet the farm on AgroFresh Solutions, but this is a $2 stock whose products have a total market opportunity measures in the billions of dollars.

There is also a better than average chance that some other company in the ag chemical business buys the whole company enhance their portfolio at some point.

There is my random walk down Wall Street for this week. Enjoy the weekend

Posted to The Community Bank Investor… on Apr 23, 2021 — 11:04 AM
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