Don't Harvest Monsanto Yet

NEW YORK ( TheStreet) -- Just like fertilizer to a plant, it's appropriate that shares of agriculture giant Monsanto ( MON) have grown impressively over the past two years.

This has come even amid protests over Monsanto's genetically modified seeds and complaints about the company's ethics. Some believe that Monsanto has established unfair pricing tactics towards farmers. These issues and others have soured Monsanto's relationship with consumers. There's never a dull moment. But investors have had little to complain about.

With Tuesday's close of $112.90, shares of Monsanto are up more than 60% since May 2012. But with the stock down 3% year-to-date, I don't believe it's time to harvest these gains. And given the company's strong second-quarter earnings results, Monsanto's management have planted optimism that these shares are far from ripen. So, for stock should bear more fruit, investors need a little patience.

Last week, the company reported revenue of $4.65 billion, which jumped 7% year over year. For a company that's known to "under-promise," this was a strong sales quarter, helped by a 21% jump in soybean seed and traits. Corn seed and traits edged up more modestly at 4.1%.

Unlike previous quarters, Monsanto's core seed operations are doing the heavy lifting. Investors should be encouraged by this. There were concerns last year that the company's agricultural productivity business, which included herbicides such as Roundup, had moved from being a side dish to the main course.

Ahead of the report, given that corn is Monsanto's main revenue-driver, some analysts forecast weak corn acreage. They thought they were doing the company a favor. But through management's efforts, the seed and genomics business have regained their bread-and-butter status.

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