One of American Vanguard Corp. (NYSE:AVD)’s main sources of strength is its co-marketing program with Monsanto Company (NYSE:MON) , a sustainable agriculture company. This program, which was recently extended up to 2017, involves the inclusion of American Vanguard Corp. (NYSE:AVD) Chemical’s post-emergent corn herbicide Impact in Monsanto Company (NYSE:MON)’s weed management platform Roundup Ready PLUS, widely used by corn growers worldwide.
Firmer global push
Expecting continued growth from its global corn portfolio and better-than-anticipated strength in its agricultural productivity segment in its FY 2013 first half, Monsanto Company (NYSE:MON) recently raised its guidance for the year. Monsanto Company (NYSE:MON)’s guidance range was raised to $4.50–$4.55 on an ongoing basis and $4.52 –$4.57 on an as-reported basis, for 20% growth in ongoing earnings. It likewise projects its global corn business to achieve record total volumes with growth in the mid-teens.
International expansion is shaping up too as one of the growth drivers for American Vanguard Corp. (NYSE:AVD) this 2013. In July last year, its AMVAC Chemical subsidiary established a unit in the Netherlands to manage the sales, marketing, registration and finance as well as the supply chain of all ex-U.S. sales of the company’s products.
Additionally, more global opportunities in consumer household and lawn and garden retail markets can be expected in the joint venture American Vanguard forged in December 2012 with TyraTech. This partnership will harness TyraTech’s technology based on the synergy of natural ingredients to commercialize pesticide products and solutions. Its global playing field likewise includes markets for synthetic-based products with applications among commercial, institutional and professional users, including those for crop protection and seed treatment.
Final take: where the attractive valuation is
Monsanto Company (NYSE:MON) and Rollins as stock investment alternatives seem positive, given the strong fundamentals of the pest control industry and their earning potentials. Nevertheless, initiating immediate action on American Vanguard looks more attractive with its current P/E ratio of 19.52. Rollins, in comparison, is trading at about 32 times its earnings while investors pay more than 21 times on Monsanto Company (NYSE:MON)’s earnings currently.
Last year, American Vanguard’s stock price more than doubled, and a 20% increase in stockholders’ equity was posted, gains that the company appears en route to achieve anew this year. On a final note, the company has a 19-year streak of dividend payment, the latest of which was the $0.07 semi-annual cash dividend it paid this April, which was 40% above the payout for the 2012 first half.
The article Can a Killing Be Made From These Pest Killers? originally appeared on Fool.com and is written by Arturo Cuevas.
Arturo Cuevas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Arturo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
