A Goldman Sachs analyst removed chemical producer Albemarle Corp. from his "Conviction Buy" list to make room for Monsanto Co., which posted a 42 percent rise in fiscal third-quarter profit.
Analyst Robert Koort still has a "Buy" rating on shares of Albemarle and is upbeat on the company meeting bullish growth targets revealed in May at its investor meeting.
Koort said Albemarle is a high-quality, smallcap stock with solid management and profit margins, robust cash flow generation and financial discipline. However, given ongoing cost and demand factors hurting specialty chemical companies, Koort said Monsanto offers relatively greater near-term potential.
"We believe investors are better served focusing on agricultural and fertilizer names in the current economic environment as global fundamentals there remain exceptionally strong," Koort wrote in a client note.
On Wednesday, Monsanto attributed the strong quarterly results to robust performance by Roundup herbicide and its seeds and traits business. Monsanto also boosted its earnings outlook for the year.
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