This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

4 Stocks Poised to Win -- or Lose -- From the Expanding Drought

NEW YORK (Stockpickr) -- If you a draw a straight line north from Texas to the Canadian border, you'll track a big splotch of red. That's the area where the U.S. is simply parched. Several years of subpar precipitation have led to increasingly arid growing conditions, and as of recently, the land was even more parched than it was a year ago. That means this summer's drought may be worse than the already brutal drought of 2012. As an investor, you need to track the drought's implications. A range of companies will be clearly vulnerable to reduced spending by farmers, while other firms will actually stand to benefit.

>>5 Stocks Poised for Breakouts

Here are four companies that could be strongly impacted -- positively or negatively -- by the persistent U.S. drought.

Bunge

The U.S drought reduces crop yields, which means that U.S. has fewer crops available for export. That's good news for other countries' farmers, who can make up the shortfall. Bunge (BG) has a dominant presence in Brazil, where it acts as a middle man between farmers and food processors. Bunge processes corn, soybeans and other crops, and firm prices and output in Brazil mean rising profit spreads for this firm.

Though Bunge's sales are expected to rise a moderate 9% this year (to around $66 billion), the profit margin on those sales should be far higher in 2013. That's why analysts expect per-share profits to rise nearly 60% this year to around $7.30 a share. Further margin gains should push EPS above $8 by next year, according to consensus forecasts. And in light of this stock's nearly 20% pullback since early February to a recent $66, the value case has only strengthened. Analysts at Citigroup seep this stock moving up to their $105 12-month price target.

Lindsay

The painful drought has brought home a clear message to farmers: Use every drop of water as if it were your last. To conserve water, many farmers are turning to Lindsay (LNN), which makes highly efficient irrigation equipment. You may have seen Lindsay's long pivoting arms dispensing water over a field of crops as you drive by. The company's sales base doubled from fiscal 2007 to fiscal 2012 (to about $560 million), and analysts expect sales to rise by 20% this year.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs