"Come mister tally man, tally me bananas" -- Harry Belafonte, "Day-O"

When we saw good banana results come out of Motley Fool Hidden Gems recommendation Fresh Del Monte (NYSE:FDP) a few weeks back, sharp-eyed investors might have turned their attention to Chiquita Brands (NYSE:CQB) as another company primed to outperform. Not only does Chiquita sell about twice as many bananas (in revenue terms), but those bananas currently make up a much larger percentage of Chiquita's business.

Well, that's exactly what happened. Chiquita reported that first-quarter sales grew 17%, led by higher volume and pricing for bananas. Margins also improved dramatically -- the operating margin climbed to 10% from 4% a year ago -- and the company nearly tripled its operating income and more than quadrupled its net income. Both top- and bottom-line results handily beat Wall Street estimates, though this company is sparsely followed.

The big secret to the first quarter wasn't much of a secret at all -- the company saw much better banana pricing and sold more of them. Europe was particularly strong in the first quarter, since more than half of the division's improved operating income was from better European pricing. Of course, banana pricing (and crop availability) is highly variable, so investors should be very cautious about simply multiplying the first-quarter results by four and assuming that's a fair estimate for all of 2005.

While bananas led the way, the company's other fresh produce business did OK as well. Sales were up about 11%, and operating income more than doubled. The company continues to build share in pineapples, and a reorganization of the melon business seems to be helping as well.

Of course, there is a major lingering piece of business to deal with -- the completion of the acquisition of the Fresh Express business from Performance Foods (NASDAQ:PFGC). Once complete, Fresh Express will expand Chiquita's revenue base by close to one-third, and it will dramatically alter its fresh-cut produce business. Not only is Fresh Express a major player in the retail pre-cut fruit and vegetable business, but also it boasts major clients such as Yum! Brands (NYSE:YUM) and McDonald's (NYSE:MCD).

Surprisingly enough, fast-food chains are actually seeing demand for produce products, and the combination of Fresh Express' fast-food relationships with Chiquita's pre-existing business with large suppliers such as Ahold (NYSE:AHO) could be compelling. This is especially true when you consider that Fresh Express is mostly just a North American business and Chiquita has significant tie-ins to the European market.

Are there risks with Chiquita? Of course. The company announced that some employees may have violated trade laws (kudos to management, though, for not burying this information), and there is an ongoing flap regarding EU tariffs that give preferential treatment to bananas sourced from former colonial areas such as the Caribbean and West Africa. Plus, you have the normal risks involved in closing and integrating a major purchase like Fresh Express.

For better or worse, Fresh Del Monte and Chiquita are pretty much it for publicly traded pure plays on produce. Chiquita looks like the cheaper company, but Fresh Del Monte pays a better dividend and boasts better margins and return on equity. Chiquita is also on the brink of major change, since the acquisition will help cut its reliance on bananas and give it new growth opportunities. Both are fine companies, but with Chiquita having a slight edge in corporate governance issues, I'm tempted to put it just a banana peel's breadth ahead for now.

The USDA says we all need more fruits and vegetables, so here are some nutritious prior Takes:

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).