S&W Seed Company (NASDAQ:SANW) will most likely correct its mistake and grow quality stevia. However, even if the company abandons its stevia production, it is still the world’s largest grower of alfalfa, which is a high value cash crop, making the company a viable investment. S&W has also shown that it is indeed growing, as seen with its acquisition earlier this year of the South Australian company, Seed Genetics International Ltd, a breeder, producer, and marketer of proprietary, non-dormant alfalfa seed varieties, thus creating the largest non-dormant alfalfa seed company in the world now geographically diversified and able to have year round production. S&W Seed Company (NASDAQ:SANW) stock closed on Friday July 12th at $7.79 per share, well off its mid March high of $11.40 per share. I like S&W Seed Company (NASDAQ:SANW), especially since the stock pulled back making it a more attractive buy. If the company continues to grow via buying other seed growers, I can see the stock work its way back toward its highs.
Conclusion
While I am excited about the prospects of both Reb D and Reb X and their potential as the next generation of stevia, I am not as excited about the costs of the farm-based method to grow stevia. This is not to say that PURECIRCLE LTD (OTCMKTS:PCRTF) or S&W Seed Company (NASDAQ:SANW) are not good companies to invest in. PureCircle supplies roughly 90% of the U.S. stevia –excluding tabletop sweeteners– and is looking to expand into new markets, including India. PureCircle, which has a market cap of $938 million, has had a good run; it’s stock is near its 52-week high, closing on the OTC on Friday July 13th at $5.77 per share. While I like PURECIRCLE LTD (OTCMKTS:PCRTF), as a company the trading volume on the OTC is just too low, averaging just over 400 shares per day while on the London exchange it averages just under 250,000 shares traded per day. S&W Seed Company (NASDAQ:SANW), on the other hand, has seen its stock drop 32% from its March highs after getting ahead of itself due in part to analysts like Piper Jaffray boosting its price target. However, now that the stock price has settled, the entry price for this quality company is now more attractive, especially if it continues to grow and can produce a quality crop of stevia.
What I am excited about is the prospect of a fermentation-based method to develop the next generation of stevia because, if successful, it would produce a quality product on an industrial scale at a much lower cost. And as Cargill has shown by throwing its money behind Evolva, that’s where I believe a bulk of the future investment dollars will go. While I like the boldness of Stevia First Corp (OTCMKTS:STVF)’s attempting to develop a vertically integrated stevia company, I think if its fermentation process continues to show success, a larger company like PureCircle or PepsiCo, Inc. (NYSE:PEP) may invest in or buy out the company. And if there are rumblings of such a possibility, I could see the stock rise significantly. But for that to happen, Stevia First Corp (OTCMKTS:STVF) must continue to show progress in developing the fermentation process on an industrial scale.
Disclosure: none
