Could 2012 Be the Year for AG Stocks?

You can profit from Mother Earth, according to some followers of agricultural or “AG” stocks. While historically a slow

Photo courtesy Rural Route 3 blog

growth industry, many believe 2012 could provide a bountiful harvest for these agricultural stocks for a variety of reasons:

  • Since the recession of 2008, food inflation has sky-rocketed, scaring consumers.
  • Food price inflation is good for AG stocks. Starting in 2005, the International Monetary Fund’s food price index is up 90 percent. And 41 percent of food and beverage companies expect to increase prices in 2012, compared with 12 percent a year ago, according to http://www.grantthornton.com.au/files/ibr_food_and_beverage_nov11.pdf
  • As the planets population has risen, the arable land available for planting hasn’t kept up.
  • With new technology, AG products can be used in alternative fuels. 
  • With the growth in organics and more healthy lifestyles for “baby boomers” worldwide, profits are perking up.

For general research on trends in the industry, take a look at http://www.agrifoodforum.com/.

For 2012, some experts suggest AG stocks should have good growth and offer some defense for a more speculative industry portfolio. What are some small cap stocks that fall into the “AG” category and could benefit as food prices keep getting higher? 

 Omaha, NE-based Lindsay Corp. (NYSE: LNN, http://www.lindsay.com) designs, manufactures, and sells irrigation systems that are primarily used in the agricultural industry to increase or stabilize crop production while conserving water, energy, and labor. LNN also manufactures and markets various infrastructure products. The company serves departments of transportation and roadway contractors, subcontractors, distributors, and dealers.   The stock has a 52-week range of $46.03 -$ 73.75 and a market cap of about $841 million with a daily average trading volume of 140,000 shares.  For the second quarter ending February 29, LNN beat analyst estimates on both revenue and earnings significantly. It closed May 3 at $64.90, down $1.26 on the day.

West Fargo, ND-based Titan Machinery (Nasdaq: TITN, http://www.titanmachinery.com), a recent IPO which has doubled, owns and operates a network of full service agricultural and construction equipment stores in the United States and Europe. It engages in the sale of new and used equipment. The company sells agricultural and construction equipment manufactured under the CNH family of brands, as well as equipment from various other manufacturers. Recent quarterly revenues were up 67 percent to $132 million with earnings of $6 million.  The stock currently trades about 425,000 shares a day and has a 52-week range of $15.58 – $36.92. Its market cap is near $730 million. It closed May 3 at $35.28, down 77 cents on the day.

Newport Beach, CA-based American Vanguard (NYSE: AVD, http://www.american-vanguard.com) manufactures and formulates chemicals for crops, human, and animal health protection. Its chemical products include insecticides, fungicides, herbicides, molluscicides, growth regulators, and soil fumigants in liquid, powder, and granular forms.  The stock’s 52-week trading range $8.92 – $25.34 with a market cap of about $700 million and volume of more than 280,000 shares traded daily. It closed May 3 at $25.28, down 75 cents on the day.

Port Washington, NY-based Aceto Corp. (Nasdaq: ACET, http://www.aceto.com) sources, markets and distributes the following:  Pharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protection products and specialty chemicals worldwide. The company operates in three segments: Health Sciences, Specialty Chemicals, and Agricultural Protection Products.  ACET stock has a 52-week range of $4.51 – $9.99 and an average daily volume of more than 190,000 thousand shares. Its market cap is about $240 million. ACET closed May 3  at $8.90, down 17 cents on the day.

A possible company for the more aggressive investor and further out on the natural pharmaceutical spectrum is tiny San Diego, CA-based Medical Marijuana (OTC: MJNA.PK, http://www.medicalmarijuanainc.com). MJNA which is a legal growth industry in California and 15 other states, provides various business management solutions to the hemp and medical marijuana industries in the United States. It also operates the Hemp Network, a network marketing platform that provides consumers with hemp products. MJNA offers tax and collection solutions to governments including revenue collection systems, turn-key management solutions, and marijuana testing and gradation. The company’s 4th quarter revenue increased in excess of 100 percent over the prior quarter to $430,000.  MJNA’s 52-week range $.01 to $.19 with a market cap of $22 million and volume of near 3.6 million daily shares. It closed May 3 at $.038, up $0.0015 for the day.

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