Andy Nasr Ag Growth International Inc AFN-T BUY Dec 18, 2012

Good way to play the agriculture sector without taking commodity risk. Global leaders. Benefits from Brazil and India upgrading farming infrastructure. Record sales last year, record backlog and increased guidance this year.  Deleveraging quite quickly. Lots of free cashflow. Only at 7x EBITDA. Potential acquisition. Yield is 1.23%.

They historically grow through acquisitions, but results have been spotty. New management then focused on organic growth. He hasn't nought it yet because analyst projections are too high for his comfort. That said, the stock is cheap. It's on his radar. Are well-positioned as global food demand continues to rise.

Demand for farm equipment continues to rise. Business has been performing well lately. Owns shares in company, would recommend holding. Excellent business with a good trend behind them. 

EBITDA in Q1 missed by 8%. Timing of commercial projects moved to the second half, which market didn't expect. Concern about reversion in profitability cycle. Trades at 9x 2024 PE, lots of structural enhancements, street estimates growth at 9%. Balance sheet not perfect, but improved quite a bit. Good level to buy, underowned.

Last year was a record year, this year's top line not as impressive and stock pulled back. Guiding toward another record year. Record backlog in international markets. Paying down debt quickly. Unsolicited takeover offer, good chance of a higher bid.

Its fair market value is 104% of where the stock is right now. It peaked 3 months ago when it hit 4x book value. It may come down a bit. the balance sheet is okay. He wishes they had a higher yield. Is okay. Would buy at $42, but wouldn't sell on a panic either.

Believes food infrastructure business very good. Profits and revenues very strong. Management recently rejected a takeover offer. Stock way too cheap given fundamentals of business. Expecting Q3/Q4 will demonstrate further growth. 

He projects record EBITDA in 2024, and have a record backlog based on strong demand for agriculture infrastructure in Brazil and eastern Europe. Trades at a cheap 7x EBITDA. A peer just got acquired at 8.5x EBITDA in the U.S. Are rumours of a takeover.

Disappointing. Slowdown in farm division last year, and management anticipates continued challenges. Management keeps cutting guidance, so its credibility has taken a hit. Better use for capital elsewhere over the next year or so.

Frustrating, he sold. Numbers good, but continues to have lots of problems in its farm business. Commercial side's been pretty strong. Some of its geographies have been weak. Guided down. Not worth it, look elsewhere.