Monsanto Company (MON), Agrium Inc. (AGU): Why This Stock Is Poised to Hit a New High Next Week

Page 1 of 2

It’s been a matter of days since Monsanto Company (NYSE:MON)’s stock hit a new high. The seed giant’s top and bottom line growth last year were far better than that of its peers, and the company also sports solid financials.

The already bullish markets might just get another reason to pump Monsanto’s shares up even further next week when the company turns up with its second-quarter numbers. Analysts are looking at 13% higher earnings per share on 11.5% increased revenue. I am not ruling out a beat from a company that has had a fairly good history of earnings surprise.

Monsanto Company (MON)

It’s a critical quarter

In front of the 21% and 169% jump that Monsanto reported in its revenue and net profit, respectively, in its first quarter the Street’s expectations appear pretty muted. Especially since Monsanto Company (NYSE:MON)’s second quarter coincides with one of its most critical selling seasons, and it had already made a good start in the first quarter.

The period from December to February, which also represents Monsanto’s second quarter, is when farmers in the U.S. buy seeds in preparation of the upcoming spring planting season. Monsanto wasn’t the only one that reported heavier pre-spring orders this year–peers E I Du Pont De Nemours And Co (NYSE:DD) and Agrium Inc. (NYSE:AGU) confirmed it as well. Agrium, which derived more than half its sales from seeds and crop nutrient and protection products last year, reported a 10% increase in seed bookings year to date. It also expects higher product prices this year, which should push up revenue further. Revenue from its North American seed business grew 16% in 2011 and 11% in 2012.

Industry farm reports are equally inspiring. According to a recent Farm Futures survey, farmers in the U.S. are looking at record corn as well as soybean planting this spring. News from Reuters also suggests that in some key crop growing areas like Louisiana and Texas, corn seeding is well above last year’s level. After the ravaging drought last year, this was expected.

When a dry spell can be good

The drought, in fact, is one reason why Monsanto Company (NYSE:MON)’s sales could have gone up in the second quarter. It gives a bigger opportunity to the company to promote its hybrids and incentivize farmers to be on the safe side by opting for products that can withstand extreme temperatures. In fact, this race is already at its peak.

Apart from fungicides targeting the U.S. planting season, DuPont has lined up 44 Optimum AQUAMax hybrids for the U.S. this year in a bid to double their penetration of the market. A report on Agweb.com even suggests that DuPont’s corn and soybean seeds were planted across a larger number of acres than Monsanto’s in 2010 and 2011. Half of DuPont’s research and development expenditure in 2012 went towards its agriculture business, which in turn emerged as its biggest and top performing units with nearly 30% contribution to total sales.

Likewise, though agricultural sciences made up just 11% of The Dow Chemical Company (NYSE:DOW)’s total sales last year, it was the only segment where sales grew 13% to hit a record when other businesses failed to deliver. It helped Dow’s share in the U.S. corn market to hit 8%. Little wonder that agriculture is featured among Dow’s priority businesses for this year and beyond. Its targeted 2013 spring launch of Enlist herbicide has been delayed by a year on protests, but its multiple-crop insecticide Sulfoxaflor should be on schedule for launch this year following recent proposals by the U.S. Environmental Protection Agency.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!