Agricultural and farm equipment maker AGCO (AGCO) offers a variety of tools, tractors and related equipment worldwide. The company has a large annual revenue base of approximately $10 billion and a sizable market capitalization as well at $5 billion. Moreover, the stock has been performing well the past year sitting less than 10% from its $55.15 52-week high. Board director Mallika Srinivasan apparently thinks the stock is moving higher by buying on April 19, a massive 40,576 shares equating to almost $2 million worth of stock. Operationally, the stock has done well beating consensus estimates in three of the last four quarters. The stock looks attractively priced at just a 9.5x trailing and 9x forward P/E. Lastly, the company is trading at a rather cheap .5x price to sales and enterprise value to sales while generating a healthy 16% return on equity. However, if I think one is wisely looking to diversify in this sector, Caterpillar (CAT) and Potash (POT) are both worth a look.
Dow behemoth Caterpillar has a massive worldwide presence with an annual revenue base well over $60 billion and a market capitalization not far behind. Moreover, this stock just recently got hit on a disappointing earnings report creating what I think is a nice, value buying opportunity. The reason I say that is it smashed consensus estimates in each of the three previous quarters. In addition, an 11x trailing and 9.5x forward P/E for such a well known company makes it attractive. Lastly and perhaps most importantly, is its stellar 2.5% dividend that consistently gets raised.
Potash is another juggernaut, operating in the agricultural chemicals arena, with over $7 billion in annual sales and a market capitalization at $35 billion. This Canadian-based firm just reported a well-received quarter that had the stock jump 3%, but still is trading at the lower half of its 52-week range. The company is generating a very nice 11% return on assets and 23% return on equity, which is enviable. Lastly, the company is sporting a very nice 2.9% dividend yield, which is considerably more than the 2.0% of the average Fortune 500 company.
Universal Display (PANL) operates predominately in the flat-panel display lighting industry, while offering a diverse array of other lighting options. The stock has been volatile the past year as it currently sits in the middle of its 52-week range. Major shareholder Discovery Global Opportunity Master Fund apparently sees the stock moving higher buying on April 22, 92,050 shares equating to almost $2.8 million worth of stock. This massive purchase is always encouraging and looking at the balance sheet I see some great things. The company has zero debt with well over $5 per share in net cash. In addition, the company sports very strong gross margins at approximately 75% and operating margins over 16%. One should note though that the company is not cheap from an earnings standpoint with a very big 155x trailing P/E and still rather pricey 22x forward P/E. I think this is one to keep on the radar for now while one may be better served in one of its strategic partners DuPont (DD).
DuPont is a behemoth with over $35 billion in annual revenue and a market capitalization at approximately $50 billion. This Dow component is more well-known for being a chemicals company, but it does have an electronics segment, which includes "DuPont Displays." The company sports healthy operating margins of 13% as well while churning a very nice 26% return on equity. Its 18x trailing and 12x forward P/E make it more reasonable as well. Lastly and most importantly to me, it has a consistently growing 3.5% dividend yield. I think the stock should serve value, income-oriented investors well over the long run.