The Costa Group Holdings Ltd (ASX: CGC) share price is up slightly in afternoon trade following the release of its annual general meeting presentation.
At the time of writing the horticulture company's shares are up 0.5% to $6.81.
What was in the presentation?
The main talking point in the presentation was of course its guidance for the year ahead.
With its shares changing hands at approximately 34x trailing earnings, the market was looking for solid bottom line growth.
And Costa appears to have delivered on this. According to the release, trading for the first four months of FY 2018 have been positive and in line with expectations.
Because of this, and the acquisition of a further 37% of its African Blue joint venture, management has upgraded its full-year NPAT-S growth guidance to approximately 20%.
This is an substantial increase on the 10% profit growth guidance it provided at its full-year results in August, but does not include transaction costs and amortisation of intangibles arising from the African Blue acquisition.
Should you invest?
Judging by the market's reaction today, it appears as though this guidance revision was largely expected by the market and had already been priced in.
Because of this I see limited upside for its shares at the current share price. So despite how highly I rate the company, I wouldn't consider an investment unless its shares fell down towards the $6.00 mark. At that level I think it provides investors with a more compelling risk/reward.
Until that happens, though, I would suggest investors stay clear of it and consider other food shares such as Tassal Group Limited (ASX: TGR) or Huon Aquaculture Group Ltd (ASX: HUO).
