Chemical giant and Dow component DuPont (NYSE:DD) has had an excellent 2013, posting gains of more than 41% so far this year. Not only is that better than the 23% gain that the Dow Jones Industrials (DJINDICES:^DJI) have seen year to date, it also stands well above what chemical industry peer Dow Chemical (NYSE:DOW) has managed to achieve. Given the stock's outperformance, DuPont investors want to know what's behind the company's strength and whether it's likely to persist into 2014 and beyond.

DuPont has worked hard to reinvent itself, going beyond its roots as an industrial chemical company to identify the huge opportunity in agricultural chemicals, fertilizers, and seed products that help the farming industry boost crop yields and feed an increasingly hungry world. Seizing on Monsanto's (NYSE:MON) success, DuPont has taken big steps forward in realigning itself as an ag-focused company, and investors have supported that long-term strategy and its promise. Yet some investors remain uncertain about how much more growth DuPont can squeeze from seeds and other agricultural products. Let's take a closer look at what moved shares of DuPont in 2013.

Stats on DuPont

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Source: S&P Capital IQ. * Includes impact on earnings from discontinued operations involved in sale of DuPont's performance-coatings business.

DD Total Return Price Chart

DuPont Total Return Price data by YCharts.

Why has DuPont stock done so well in 2013?
As you can see above, DuPont started breaking away from the Dow's returns early in the year, with a big jump in late April and early May starting the chemical giant on its path toward outperformance. Fundamentally, investors have applauded the company's many moves toward transforming itself into a higher-margin company with better growth prospects.

DuPont started reaping the benefits of its transformation early on in the year. The company's first-quarter results showed the disparity between the company's two main businesses, as agricultural revenue rose 14% even as performance chemicals saw sales plunge 17%. Those results were consistent both with the success that Monsanto saw and the relatively lackluster performance of Dow Chemical, which has been far slower about jumping onto the agricultural bandwagon.

DuPont took a major step forward in growing its agricultural business in late July, when it completed its acquisition of an 80% stake in Pannar Seed, a South African seed company with key connections to markets on the African continent. Africa is a largely untapped market when it comes to enhancing crop yields, and products like DuPont's could help revolutionize farming there, representing not just a huge profit opportunity for the company but also making possible big gains in standards of living in Africa.

Competition is fierce in agriculture, but the companies involved also work together in certain cases. Early this year, DuPont and Monsanto resolved patent lawsuits by agreeing to cross-license some of their intellectual property related to agriculture. That's something Monsanto has also done with Dow Chemical, but it also shows how important it is to come up with new innovations in order to have something valuable to trade when patent infringement litigation arises.

DuPont's strong share-price gains reflect the heavy-lifting that it has already done in moving toward a stronger focus on agriculture. As long as the farming industry remains healthy, that move will likely pay dividends for DuPont shareholders. Yet even amid the long boom in agriculture, long-term investors have to remember that even farming is cyclical, and the next downturn could make DuPont's decision seem ill-advised in hindsight.

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