Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Monsanto's Back!

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

It might be a cliche, but it's still true: Even in tough times, people have to eat.

Witness Monsanto (NYSE: MON  ) , which blew the doors off Wall Street's estimates yesterday. Fiscal first-quarter earnings came in at a buck a share -- more than doubling from the year-ago quarter -- and the company raised yearly guidance by 5% at the low end.

Monsanto seems to have little problem competing against DuPont's (NYSE: DD  ) Pioneer and Syngenta (NYSE: SYT  ) , thanks to strong sales in the southern hemisphere; overall sales of seeds rose 31% compared to last year. Sales of Roundup and other herbicides fared even better, up 35% compared to last year.

The upcoming U.S. planting season looks similarly promising. The fiscal quarter concluded at the end of November, but through the end of December, prepayments for seeds were running 50% ahead of last year. That's good news for Monsanto, but also for other agricultural stocks, like fertilizer makers PotashCorp (NYSE: POT  ) , Mosaic (NYSE: MOS  ) , and Agrium (NYSE: AGU  ) , and equipment maker Deere (NYSE: DE  ) . Farmers are still planting, despite lower commodity prices.

The great thing about Monsanto? While agriculture is somewhat cyclical, the price Monsanto can charge for seeds isn't completely connected to the price farmers can get for the food they produce. Since Monsanto is constantly coming out with new, higher-yielding seeds, it can charge incrementally higher prices, even if commodity prices stagnate. For instance, Monsanto is developing drought-resistant corn in conjunction with BASF, capable of delivering 6%-10% higher yields in drought-prone areas. If it splits the potential increased profits with the farmer, that's a substantial increase in price.

It may be a while before we see the highs that Monsanto's stock set last summer, but the company is definitely back -- big time.

Further Foolishness to chew on:

Motley Fool Rule Breakers is always on the hunt for high-growth cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy never left.

Read/Post Comments (0) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 806309, ~/Articles/ArticleHandler.aspx, 10/24/2016 7:50:49 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:01 PM
MON $102.00 Down -0.07 -0.07%
Monsanto CAPS Rating: ***
AGU $92.84 Up +1.81 +1.99%
Agrium CAPS Rating: ****
DD $70.14 Up +0.44 +0.63%
DuPont CAPS Rating: ****
DE $86.70 Up +0.27 +0.31%
John Deere CAPS Rating: ***
MOS $24.51 Up +0.20 +0.82%
Mosaic CAPS Rating: ****
POT $16.72 Up +0.31 +1.89%
PotashCorp CAPS Rating: ****
SYT $80.01 Down -5.10 -5.99%
Syngenta CAPS Rating: *****