Please ensure Javascript is enabled for purposes of website accessibility

Monsanto's Monster Year

By Billy Fisher – Updated Apr 5, 2017 at 4:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The corn craze has created cash, but will it last?

The craze over ethanol and corn has played a major role in the expansion of seed company Monsanto's (NYSE:MON) business. The company announced Tuesday that it would pour $155 million into building a new seed conditioning facility in Nebraska, as well as expanding its existing facility. The U.S. Department of Agriculture estimates this fall's harvest to be the largest corn crop ever produced. It is little wonder then, that Monsanto was able to realize record net sales of nearly $1.6 billion for its Q4 results that were reported yesterday. The net sales figure represents a 13% increase over the prior year.

On the downside, however, the company reported a net loss of $0.39 per share compared to a net loss of $0.27 per share in its year-ago quarter. Earnings were watered down as a result of the company's acquisition of cotton company Delta and Pine Land. Monsanto also offered up an outlook for its 2008 fiscal year that was slightly below that of Wall Street estimates. Shares of its stock were relatively flat in mid-morning trading action.

There's no doubt that 2007 has been a monster year for Monsanto and its peers. Monsanto shares are up 71.9% year to date. Similar companies that have been able to cash in on the corn craze include Mosaic (NYSE:MOS), Potash (NYSE:POT), and Agrium (NYSE:AGU), with respective year-to-date price appreciation of 160.3%, 136.8%, and 67.5%. While business in general remains strong in this sector of the market, it will be interesting to see what results these companies are able to produce in subsequent months, given the fact that ethanol prices are down 30% since spring. Each of the companies mentioned has a fairly large market cap and should be able to ride out any downturn in the industry, but if you don't already have money in this sector, I'd take a wait-and-see approach.

For related Foolishness check out:

Try out any of our investing newsletter services free for 30 days.

Fool contributor Billy Fisher has no financial interest in any stocks mentioned. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Monsanto Company Stock Quote
Monsanto Company
MON
Nutrien Stock Quote
Nutrien
POT
The Mosaic Company Stock Quote
The Mosaic Company
MOS
$48.53 (-7.60%) $-3.99

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.