Lululemon (LULU) rode the yoga pants and “athleisure” trend to massive gains. Between its 2007 IPO and it’s top in 2013 the Lululemon stock rose 480% during a period the S&P 500 only rose 8% over the same period.
Krispy Kreme Donuts was another one. Before the donut chain was bought out by JAB Holdings last year, the stock made some major moves.
It was the hottest stock in the early 2000s. While the dot-com bubble was imploding, Krispy Kreme shares rose more than 300% between its IPO in 2000 and 2003.
Healys was another one.
You remember seeing kids roll around with the shoes with wheels in them?
Before the company was sued into oblivion the stock ran from $5 to more than $50 a share in the mid-2000s.
Now the next hot trend is here -- avocados -- and there’s a simple and direct way for investors to get in on it all.
Food trends tend to come and go, but it looks like this one is here to stay.
Low fat was the rage for decades.
The U.S. FDA recommended diets high in carbohydrates (sugar) and low in fat.
The recommendations directly led to soaring levels of obesity, diabetes, and endless other conditions directly created by or heavily contributed to by a high-carb diet.
It was all wrong and everyone is figuring it out fast.
Protein and fat are back in vogue and avocados are right at the center of it all.
Avocados are the perfect food according to the most effective dietary guidelines. They are high in vitamins, “healthy fats,” and low in sugar.
The world has taken notice too.
Avocado consumption per capita has risen from 3.2 pounds in 2010 to 6.9 pounds in 2015 in the United States.
Avocado imports from Mexico, which account for 82% of the U.S. avocado market, rose from 24 million pounds in 2000 to 1.76 billion pounds in 2015.
That’s a big boom right there. However, it’s just the starting point for the avocado boom.
The rest of the world is catching on to avocados too. Specifically, China has taken a liking to avocados too.
The Financial Times reports, “Exports from Latin American nations such as Mexico and Chile [to China] are growing by about 250 per cent a year, leaping from just 154 tonnes in 2012 to more than 25,000 tonnes in 2016.”
This makes China the number two avocado consumer in the world.
Relative to the U.S. which consumes more than 800,000 tonnes of avocados per year, that’s a small number.
But it does provide another layer of growth to a market that just can’t handle it because supply is going to take a long time to catch up to demand.
It takes a minimum of three years for a new avocado plant before it bears any fruit. Some kinds take as long as 15 years to start to bear significant quantities of avocados.
It’s a classic situation of demand overwhelming supply and prices are going up.
This chart from Bloomberg shows what’s happening to Mexican avocado prices over the past two years:
The chart shows avocado prices more than doubling in the past few months.
Granted, avocado prices are seasonal. But avocado prices have doubled and we’re still a few weeks away from peak price season.
All of this good news for avocado growers and investors can get in on the avocado boom with Calavo Growers (CVWG).
Calavo dubs itself “First in Avocados.”
Rob Wedin, Calavo’s vice president of fresh sales and marketing, told ProduceNews back in 2013 avocados are a “huge” part of Calavo’s business.
It’s true. Calavo owns the largest avocado packing and cooling facility in California which is the cornerstone of U.S. avocados.
In the end, the avocado play is as simple as they come.
Avocado demand has been rising in the U.S. for decades.
Now China is adding another layer of demand at a rapid rate.
And supply isn’t keeping up and prices are soaring.
As we’ve seen before with other hot trends stocks like Lululemon can and often do run for years and deliver massive gains to early investors.
Although we’re not at the start of the avocado boom -- Calavo Growers shares are up up 132% in the last five years -- the current bull market could send shares doubling again.
With the Dow at 21,000 and many stocks fully valued, there’s a real growth opportunity in Avocados and Calavo is the simplest way to go along for the ride.
High profits,
The Seed Investor