For Immediate
Release
Chicago, IL – May 11, 2012 – Today,
Zacks Investment Ideas feature highlights Features: AGCO
(AGCO), CNH Global
(CNH), Titan International (TWI) and
Agrium (AGU).
Forget Facebook, Buy
These Ag Stocks Instead
With the Facebook IPO launching
next week, and a string of hot technology IPOs in the last year,
all of the focus has been on Silicon Valley and social media
wunderkinds.
Yet there's a sector that has been
quietly racking up record earnings in 2011 and which is poised to
do the same in 2012. Not only that, it's cheap, with many companies
trading with single digit P/Es, well under the average of the
S&P 500 which is 13.
What is this mysterious sector?
Agriculture.
Corn!
The U.S. Department of Agriculture
is expecting a record corn crop of 48 million tons of corn, up 4.5
million tons, this year. It's projected to be the largest crop in
the last 75 years.
Globally, corn production is
expected to rise 10% to 946 million tons as several countries post
records.
This has lit a fire under farmers
who have gone on a buying spree of new tractors, combines,
fertilizers and crop protection supplies.
Investors, however, have been
ignoring many agriculture stocks which have led to rising earnings
estimates and low valuations, a juicy combination.
Different Kinds of
Agriculture Stocks
When you think of an "agriculture
stock" you may think of a seed maker like Monsanto or an equipment
manufacturer like Deere. But agriculture can encompass an
assortment of different areas.
The top three industries in which
to find agriculture stocks are:
- Farm Machinery
- Agriculture Products
- Fertilizers
Farm Machinery is the hottest of
the industries. It has a Zacks Industry Rank of 6 out of 265. Four
of the nine stocks in the industry are Zacks #1 Rank (Strong Buys).
This is where you'll find Deere and the other equipment makers.
Agriculture Products has a Zacks
Industry Rank of 94 out of 265. There is only one Zacks #1 Rank
(Strong Buy) out of 13 companies. These companies are the seed
makers like Monsanto and the food product companies like Bunge and
Archer Daniels.
Fertilizers has a Zacks Industry
Rank of 182 out of 265. There are no Zacks #1 Rank stocks out of
the 10 companies in this industry. The potash and phosphate
fertilizer companies have seen demand slow and prices have
flattened.
Nitrogen, however, is still hot. It
is used on corn. Some companies handle all three fertilizers.
Agrium, the only Zacks #2 Rank (Buy) in the industry, is one of
those. It just reported record retail sales in the first
quarter.
Four Of The Top Agriculture
Stocks
1. AGCO
(AGCO)
Makes agriculture equipment.
P/E = 7.8
Expected 2012 Earnings Growth: 23.4%
Zacks #1 Rank (Strong Buy)
2. CNH Global
(CNH)
Makes agriculture and construction
equipment.
P/E = 9.6
Expected 2012 Earnings Growth: 21%
Zacks #1 Rank (Strong Buy)
3. Titan
International (TWI)
Makes wheels and tires for
agriculture equipment makers.
P/E = 10.8
Expected 2012 Earnings Growth: 66%
Zacks #1 Rank (Strong Buy)
4. Agrium
(AGU)
Agribusiness company which operates
over 1100 retail locations in North and South America and
Australia. Also produces nitrogen, phosphate and potash
fertilizers.
P/E = 8.9
Expected 2012 Earnings Growth: - 4.2%
Zacks #2 Rank (Buy)
Stocks Getting Even
Cheaper
In May, the agriculture stocks have
gotten even cheaper as investors have fled the sector. This has
created a buying opportunity to add solid companies to your
portfolio at a more attractive price.
Don't Follow The
Herd
Most investors are focused on
Facebook, Apple or LinkedIn right now. But other opportunities
await those who dig a little deeper in other sectors.
The agriculture sector is still
performing at the top of its game. Demand for food isn't going to
soften any time soon. It is an opportunity to buy growth at cheap
valuations.
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AGCO CORP (AGCO): Free Stock Analysis Report
AGRIUM INC (AGU): Free Stock Analysis Report
CNH GLOBAL NV (CNH): Free Stock Analysis Report
TITAN INTL INC (TWI): Free Stock Analysis Report
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