Monsanto Company (MON), E I Du Pont De Nemours And Co (DD), Syngenta AG (ADR) (SYT): 3 Businesses We Can’t Live Without and 2 You Should Own

E I Du Pont De Nemours And Co (NYSE:DD) has failed to deliver with a sales growth rate of only 2.87% over the last five years. In addition to weak sales growth, the five year average net margins for E I Du Pont De Nemours And Co (NYSE:DD) have been a meager 7.7%, by far the lowest of the three. Even with a very respectable five year average return on equity of 28.9% and a 3.23% dividend yield, it’s hard to consider this business in the same class as Monsanto or Syngenta.

Second best is not too bad

Syngenta AG (ADR) (NYSE:SYT) may be the third largest seed producer in the world, but it is certainly no third rate competitor. There are some real advantages to not being the largest business in this industry: Monsanto Company (NYSE:MON) takes the brunt of high profile attacks on genetically modified seeds and other controversies. While the many of these attacks are unsupported by research, they do create public relations problems that Syngenta AG (ADR) (NYSE:SYT) is happy to avoid.

Syngenta AG (ADR) (NYSE:SYT) holds a 9% market share in the global seed business and pays a dividend yielding 2.58% that has grown at an annual rate of 23.26% for the last five years. With a projected earnings growth rate of 8.9% per year for the next five years and shares trading hands at only 13.5 times next year’s projected earnings, this is a business that would be fairly valued in just about any industry but is just plain cheap here. Adding in five year average net margins of 12.5% and return on equity of 22.5% and this is a world class investment poised to deliver annual total gains of around 11.5% over the next five years.

Final thoughts

Unless you believe that we do not need to increase the food supply, Monsanto Company (NYSE:MON) and Syngenta are must-have positions in the agricultural portion of any balanced portfolio. E I Du Pont De Nemours And Co (NYSE:DD) is a global brand and a fine business but is simply not valued attractively relative to Monsanto Company (NYSE:MON) and Syngenta.

Ken McGaha has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article 3 Businesses We Can’t Live Without and 2 You Should Own originally appeared on Fool.com.

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