3 Key Reasons to Consider Selling DOLE and One Alternative Stock Worth Buying

Dole’s Recent Stock Performance: A Closer Look

In the last half-year, Dole has outperformed the S&P 500 by 11%, with its share price rising to $15.35—a solid 14% gain. This impressive run may leave investors questioning their next move.

Should you consider adding Dole to your portfolio now, or is caution warranted?

Why We’re Hesitant on Dole

Despite recent gains, we’re holding off on Dole for the time being. Here are three key reasons for our cautious stance, along with an alternative stock we prefer.

1. Underwhelming Long-Term Revenue Growth

Consistent growth over several years is a hallmark of a strong business. While short-term spikes can happen, sustained expansion is what sets great companies apart. Unfortunately, Dole’s revenue has only increased at a modest 2% compound annual rate over the past three years, falling short of our expectations.

2. Slim Gross Margins Signal Structural Weakness

High gross margins typically reflect a company’s ability to differentiate its products, build brand strength, and exercise pricing power. Dole, however, operates in a highly competitive sector with little pricing leverage, as its offerings are easily replaced. Over the past two years, Dole’s gross margin averaged just 8.1%, meaning it spent $91.89 out of every $100 in revenue on supplier costs alone.

3. Marginal Operating Margins Raise Concerns

Operating margin measures profitability after accounting for essential expenses like marketing, technology, payroll, and administration. Dole’s operating margin has hovered around 2.6% over the last two years—a low figure for a consumer staples company—reflecting both its cost structure and limited gross margin.

Our Verdict

Dole does not meet our standards for quality investments. Although its stock has recently outpaced the broader market and trades at a forward P/E of 11.2 (or $15.35 per share), we don’t see compelling upside at this time. There are better opportunities elsewhere. For example, consider a resilient company behind the popular Taco Bell brand.

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