Drought Benefits Two Irrigation Companies: Valmont Industries, Inc. (VMI), Lindsay Corporation (LNN)

Valmont Industries, Inc. (NYSE:VMI)’s other businesses include Utility Support Structures Segment, which was 30% of fourth quarter sales; Engineered Infrastructure Products Segment including lighting and traffic safety products, was 27% of fourth quarter sales; Coatings Segment was 10% of fourth quarter sales.

Valmont had $414.13 million in cash and $486.19 million in debt at year-end. Its dividend yield is 0.60%.

“The main drivers of record fourth quarter operating results were the substantial sales increases in the Utility Support Structures and Irrigation Segments,” said Mogens C. Bay, Valmont’s Chairman and Chief Executive Officer.

There is risk. If the weather changes and the Great Plains states see above-average rainfall over the next several years, sales may drop off for irrigation equipment. I suspect some farmers will buy the irrigation equipment anyway as a hedge against any future drought year.  Another big concern is depletion of groundwater sources.

Both Lindsay and Valmont are well positioned to take advantage of the drought. I expect record sales of irrigation equipment in 2013.

The article Drought Benefits Two Irrigation Companies originally appeared on Fool.com and is written by Michael Hooper.

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