Monsanto Company (MON-N)

This company is in the process of being taken over. He doesn't invest in the agriculture area as he doesn't like the fundamentals the way they are right now.

Markets are saying they don’t believe the acquisition will go through. Even if the merger does not go through he likes the story. You will see the stock start to creep in another 12 months and that is how long it will take the regulatory issues to resolve.

Technically it is looking a little stronger since early spring. Trading above its 200 day moving average. Thinks it is being held back a little because farm income is still coming off. This is the 4^th straight annual decline in US farm incomes. There is also increased competition, which is affecting the stock price. He would prefer looking at something like Potash (POT-T) which has really based for quite some time.

The big story on this is the M&A craze going on in agricultural companies. The European situation has little effect on this company as Europe has only about 10% of their sales with the UK being about 2%. A fabulous company and one of his favourites. However, it is fairly close to its target price. The target one-year return is 5.4%, and a dividend of 2.1%, so you are looking at about 7.6%. The PE is 21.6X this year’s, so it is selling at a reasonable premium. He would like to see it come down closer to $90 before buying. (See Top Picks.)

Challenging environment for commodities. It will be hard for farmers to buy seed. There are currency issues abroad. This is probably a challenging environment.

(Market Call Minute.) Likes this but it is a little too pricey to buy right now.

(Market Call Minute.) One of the world leaders in agriculture.

There is a weakness in fertilizers. The only way you are going to get the growth in crop yields and the output, is by better seeds which comes mainly from this company. Thinks it is a bit highly priced at the moment.