Select Harvests

Select Harvests is one of the more interesting value propositions on the ASX right now, but it requires investors to accept a degree of commodity and weather exposure that isn’t for everyone. The bull case is straightforward: a structurally tightening global almond supply – driven by California’s Sustainable Groundwater Management Act (SGMA) forcing irrigated farmland out of production – points to elevated almond prices for years, not quarters. Select has a material cost advantage over its Californian peers, with normalised production costs of $6.71 per kilogram versus UC Davis estimates of AU$13.51 per kilogram for California greenfield operations. The balance sheet trajectory is also encouraging. Management has flagged that their primary near-term capital allocation priority is eliminating the remaining net debt of $79.1 million – with analysts expecting this to be largely achieved by the end of 2026 – at which point the company intends to reinstate dividends and potentially introduce buybacks. The return of capital distributions would likely attract a fresh wave of income-oriented investors and support a meaningful re-rating. The risks are real, however. Crop volume is inherently unpredictable – 2025 was a painful reminder that a single frost event can materially reduce output. Varroa mite, water security, and foreign exchange exposure all add layers of uncertainty. Management appears increasingly thoughtful about mitigating these risks, sourcing bees from Western Australia where Varroa is absent and investing in water efficiency. At current prices, the stock is not expensive on normalised earnings, but patience is a prerequisite.