Planting Seeds in Stock March 25, 2008, 2:00 pm Posted by David Gaffen
Frankenfood
Not every area of the economy is struggling. The boom in agriculture continues, particularly the demand for genetically altered seeds that produce hardier crops. Monsanto shares are among the day’s strongest, rising 10% after the company boosted earnings guidance for the third time in 2008.
The shares were stellar performers in 2007, but headed into Tuesday’s trading the stock was down 6.7% for the year, despite the strength in agricultural demand and in the company’s “Roundup” business, an herbicide designed for killing weeds.
The latter business is expected to fuel more growth: Analysts at BB&T Capital Markets say tight pricing and mining conditions for phosphorus, which can be refined to glyphosate, used as an herbicide, has resulted in a sharp increase in profit margins in that business.
The seed giant’s plans were to reach a long-term margin target of 54% in fiscal 2010, but will reach that this year, due to the premiums farmers are paying for genetically modified corn, soybean and cotton seeds.
