While not always the most level playing field, agriculture sure is a fertile arena in which to invest. No genius required or mulling over complicated reports and graphs: everyone always needs some fruit of the earth. Bearing this great universal truth in mind, here are some companies worth taking a look at.
Agrium Inc. (NYSE:AGU): Trading presently at around $72.50 which price falls in the middle zone of its 52-week range of $60.15-$99.14, this stock has as attractive earnings per share of $8.36 and a price to earnings ratio of 8.68. Agrium, a major retail supplier of agricultural products, is among the industry giants injecting fresh money into business extension. An increase of 50% is expected in company production by 2014, when its latest expansion project is slated for completion in its Saskatchewan potash facility.
Its strong competitor, CF Industries Holding Inc. (NYSE:CF), has a market capitalization of $10.70 Billion versus Agrium's of $11.51 billion, a mere $1 billion apart! Contrast the figures for price to earnings ratio which is 8.88 and you can say these companies are neck and neck. But, the plot thickens right about here: CF Industries Holding Inc. has an earnings per share of $18.18! So, yes, Agrium, do keep an eye out, eh? Especially for those rich and fickle investors who might want to blow $161 on a single share versus applaud you for your 4% growth rate! I wouldn't be in any rush to buy Agrium. I will be watching it, though.
Monsanto Co. (NYSE:MON): The latest news reports on this company surely ingratiate it further with "green" investors. When its best-selling herbicide Roundup created a resistance in Kochia, the deadly, bushy, monstrous weed, the company upped its game plan and went back to the drawing board to reduce the glyphosate-immunity. The plan of attack? Creating crops that resist weed-killers such as 2,4-D in Agent Orange and dicamba.
Trading at a robust $80-ish, this stock boasts a price earnings of 25.22, its earnings per share being $3.18. Surely a "wow" to its market cap of $42.92 billion, and I see this as a growth name. Now avert your gaze to its rival Basf SE (OTCQX:BASFY): expect to pay $74.60 for a single share. The market cap is $68.29 billion as opposed to Monsanto's $43.06 billion. In terms of earnings per share, we are looking at $8.57 with a price to earnings ratio of 8.68. I like Monstanto, and believe this stock should be considered in your portfolio.
The Mosaic Company (NYSE:MOS): Priced at approximately $53.58, this company has a price to earnings ratio of 10.20 and an earnings per share of $5.24, its market capitalization being $22.76 billion, all figures pretty heartening to the one who is keen to lay down some cash on this stock!! Its close competitor with the tongue-twisting name Potash Corp. of Saskatchewan Inc. (NYSE:POT) (thank God for tickers!), shows vitals of $3.32 earnings per share and a price to earnings ratio of 12.70, with the backdrop of a $36.03 billion market cap. Enough of a good show put up by the opposition to keep Mosaic focused on its game!
Latest news on The Mosaic Company? All good, all positive! Mosaic's earnings were $624 million for the second fiscal quarter, a bit down from the previous year, but why compare, ceteris paribus not being the situation?! Sales were up 13% and yes, we are comparing here and happily so! Sales volumes fell, but better pricing made up for it.
Are you now feeling inspired to put your money where MOS is? The analysts have the same opinion as the preceding two shares: just add this to your watch list, unless your gut says differently.
Potash Corp of Saskatchewan Inc.: This deserves way more than honorable mention as merely being Mosaic's best competitor. With shares priced at $43.35 or so and a star in its own right, this is a good solid company which has been home to satisfied investors for many years, what with its earnings per share of $3.32, and a price earnings ratio of 12.70. Its close rival The Mosaic Company , we have just taken a close look at, and apart from the $14 billion or so discrepancy in market cap, all other figures are very close. It is obvious both these companies merit their own spot in the limelight and, perhaps, encourage each other's performance by being their best?
Would I buy this share? Should you buy this share? Haven't you heard the old adage: "A wise man and his money are seldom parted … unless the rate of return is good enough"? Not that old, it was just made up a few minutes ago. Yes, I might venture to call this a buy: financial gurus say this is a medium to strong buy and optimists say it could go up to $75.00.
Terra Nitrogen Company, L.P. (NYSE:TNH): With a market capitalization of $3.37 billion and a price to earnings ratio of 12.74, this company has an earnings per share of $14.17. Its competitors are the also famous Agrium Inc. , and CF Industries Holding Inc. , which we know all about from our brief encounter earlier in this article. Though Terra's market cap is way less than its rivals, its other statistics are quite comparable.
Terra Nitrogen seems to pass Buffet's Return on Invested Capital (NASDAQ:ROIC) test which means that a company has an economic buffer which is its ability to earn returns over the money's cost. Terra's ROIC has increased over the past 3 years. This shows an efficient use of capital and the ability to make their shareholders happy with good dividends. It had a huge negative 3 years ago which is preferable to losses as it shows negative invested capital. In the opinion of the esteemed analysts? This company is a sell! When someone recommends that strongly? I tend to listen! Sentiment is allowed no room in this picture whatever. Neither is that question "What would Buffet do?" He has a tad more money than most of us…for now, at least. And a better flair for picking "fertile" stocks than most.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.