Scanning the charts early Monday morning, I zeroed in on a long candidate stock. You might think I’m crazy in a stock market like this to go long right now, but there are growth stories around the world to buy into. It’s a company headquartered in Argentina, and they’re involved in one of my favorite sectors right now, agriculture, and food production.
Long Position Cresud SA. (NASDAQ:CRESY)
- Friday August 1 Closing Price: 13.30
- Buy at current prices or down to 12.83 – 12.42
- Stop-loss 8% or less in a market like this.
Note: If 12.42 gives way, prices could possibly drop to about 10.12 to 9.80, so stick to your stop-loss price whatever amount it is.
Take Profit Areas
- Short Term: 14.85
- Intermediate Term: 16.98
- Long Term: 20.80
- Longer Term: 23.38
CRESY Basic Fundamentals
Cresud earnings estimates are 0.60 for 2008, and 0.81 for 2009. Its got a dividend yield of .62, and, what I like the most in a time of ill-liquidity, its total debt to equity is only 10.82%.
Cresud major competitors are agriculture giant Archer Daniels Midland (NYSE:ADM), and other agri players like Cargill and DeWied International. With global food demand forecasted to be strong for at least the next five years, and current food crises worldwide, the current agriculture companies should do pretty well intermediate to long term.
CRESY Company Profile (from Reuters.com)
Cresud Inc., incorporated on December 31, 1936, is an Argentine-based agricultural company. The Company is involved in a range of activities, including crop production, cattle raising and milk production. As of June 30, 2007, the Company owned 17 farms with approximately 449,991 hectares. Approximately 21,704 hectares of the land it owns are used for crop production, approximately 84,889 hectares are for beef cattle production, 2,609 hectares are for milk production and approximately 10,961 hectares are leased to third parties for crop and beef cattle production. The remaining 329,828 hectares of land reserve are primarily natural woodlands. During the fiscal year ended June 30, 2007 (fiscal 2007), the Company leased 25,307 hectares from third parties for crop production and 29,208 hectares for beef cattle production.
The Company is indirectly engaged in the Argentine real estate business through its holding of 34.4% interest in Inversiones y Representaciones Sociedad Anonima [IRSA], which is a real estate company. IRSA is engaged in a range of diversified real estate activities, including residential properties, office buildings, shopping centers and luxury hotels in Argentina.
The Company’s agriculture production is mainly based on crops and oilseeds. Its crop production includes mainly wheat, corn, soybean and sunflower. Other crops, as sorghum, are sown occasionally and only represent a small percentage of total sown land. As of June 30, 2007, the Company’s crop stocks consisted 6,705 tons of wheat, 34,172 tons of corn, 27,890 tons of soybean, 2,203 tons of sorghum and 3,580 tons of sunflower.
Beef Cattle Production
The Company’s beef cattle production involves the breeding and fattening of its own animals. The Company also purchases and fattens cattle, which it sells to slaughterhouses and supermarkets. As of June 2007, the Company’s beef cattle aggregated 83,727 heads, and it had a total surface area of 84,848 hectares dedicated to this business activity.
The Company conducts its milk business in three dairy facilities in two farms, La Juanita and El Tigre. During fiscal 2007, the Company had a total capacity of 3,300 cows in milking per day.
Recent Cresud News
June 11, 2008. Cresud announced that it has acquired an additional 3% investment stake in Brasilagro Compania Brasileira de Propiedades Agricolas. Cresud now holds about 14% of the company stock in Brasilagro Compania Brasileira de Propiedades Agricolas.
Disclosure: Author holds a long position in CRESY