FDP : A cheap food company

Fresh Del Monte Produce Inc (FDP) is a vertically integrated producer of fresh and canned fruits and vegetables. While most fruits and vegetables require minimal processing and are typically shipped directly from local farmers to supermarkets over several hundred miles, some produce (notably bananas) are shipped over thousands of miles and/or require canning and extensive processing, and therefore require an intermediary which can handle these diverse operations. FDP owns and operates ocean freighters, land trucks, distribution depots, canning/juicing factories, and of course, farms. The chief attraction of FDP is that it is in the recession-proof food business. Analysts are predicing EPS of $2.00 to $2.40 for 2009. I estimate that FDP will sustain a free cash flow of at least $1.50 per share in 2009. With a modest $150 million in LTD (1.5x annual free cash flow), FDP is trading $15-16, which is around PE 10 off my conservative estimate of FCF, and has insider trading at the $14.50 level. I have a largish position in FDP at a small loss, and intend to add more if the price drops further.