Growing consumer confidence on both sides of the Atlantic and healthier eating trends provide trading tailwinds for fruit company Fyffes (FFY:AIM). The tropical produce distributor looks interesting ahead of potential earnings upgrades.

Dublin-headquartered but boasting operations spanning Europe and the US as well as Central and South America, Fyffes is a leading producer, importer and distributor of high-quality bananas, melons and pineapples. Appetite for tropical fruits grows with improving consumer confidence, while increased awareness of the need to eat healthily underpins the positive outlook for the £195 million cap’s wares. It is also tapping into convenience trends through its popular fruit snacks.

Risks to forecasts include variable weather as well as rising fruit, shipping and fuel bills, yet the cash-generative, progressive dividend payer has pedigree in passing costs on through price hikes. Half-year figures (5 Sept) revealed taxable profits edging up 1.1% to €22.2 million (£18.9 million), though this was a creditable result as the firm consolidated on 2012’s step-change in profitability.

Sales are growing in every product category, with Fyffes enjoying market
share gains in bananas, its main product category and price inflation in pineapples. Brisk business in the opening months of the second half meant the company raised earnings guidance and could do so again shortly if trends are sustained. Upgrades could provide a rerating catalyst, with the firm selling on an undemanding 9.2 times December 2013’s consensus earnings forecast of 8.54 cents (7.29p).

Fyffes occupies a sweet spot and forecast upgrades look likely.