Beyond the ethanol and agriculture (or "ag") buzz, there are several things to be learned about investing in food and food-related companies. You need to understand the food development process -- from the farm to our mouths -- and how to identify each step along that food itinerary to recognize the investment opportunities (and risks). I refer to this path from farm-to-portfolio
as the food investment chain. In this installment of the Finance Professor, I will look at this chain and help sort out the wheat from the chafe for your portfolios.
| Agricultural Equipment |
||||
| Company | Ticker Symbol | Closing Share Price on 2/15/2008 | 2007 EPS (Earnings Per Share) | 2008 Estimated EPS |
| Caterpillar | (CAT) | 69.95 | 5.37 | 5.89 |
| Deere | (DE) | 85.00 | 4.00 | 5.11 |
| CNH Global | (CNH) | 48.37 | 2.60 | 3.49 |
| AGCO | (AG) | 64.49 | 2.52 | 3.25 |
| Source: Yahoo! Finance | ||||
| Seeds and Chemicals |
||||
| Company | Ticker Symbol | Price 2/15/2008 | 2007 EPS | 2008 Est. EPS |
| Monsanto | MON | 115.35 | 1.98 | 2.84 |
| Potash | (POT) | 148.04 | 3.36 | 6.67 |
| Mosaic | (MOS) | 103.37 | 0.80 | 3.72 |
| EI DuPont de Nemours | (DD) | 45.49 | 3.28 | 3.45 |
| CF Industries | (CF) | 118.17 | 6.57 | 9.59 |
| Agrium | (AGU) | 65.31 | 3.25 | 5.33 |
| Source: Yahoo! Finance | ||||
estimates, then CF and Potash offer some compelling growth relative to their peers. With a lower forward P/E
than Potash, Monsanto or Mosaic, CF appears to be a better value
play. Recently, I began a small position in CF after taking gains in Monsanto, because I still want to maintain longer term exposure to this part of the food investment chain.
Another player in this sector: Syngenta (SYT), which I did not list earlier because the company is located in Switzerland and I was not able to get readily reliable data to present. However, I think that Syngenta is worthy of further analysis, thanks in part, to its $25 billion market capitalization
and its international exposure. TheStreet Premium Services For Personal Service: 877-471-2967
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