Wednesday, December 18, 2013

Seeking Alpha: Adecoagro's Discount Remains Stubbornly In Place

All things considered, I'm happy with how Adecoagro (AGRO) has done since I made this stock an Alpha-Rich pick back in July. The shares are up about 19% since then, well ahead of the 8% rise in the S&P 500, the nearly 12% rise in the Bovespa, and the 6% rise in the iShares Brazil Index ETF (EWZ). This appreciation has come despite a drought-induced disappointing crop yield for 2012/13 and a sharp slowdown in the rate of appraised land value accretion, as improvements in sugar and ethanol have certainly helped.

Even with a double-digit improvement in Adecoagro's share price, I'm still pegging this stock as a market-beater from here. The nature of growing crops is inherently risky, and the steep price for Argentine CDS shows that there are definitely good reasons to discount the value of Adecoagro's Argentine farmland. Despite that, I believe this company's farmland is still undervalued, I believe the company will continue to grow its profitable sugar and ethanol business, and I'm willing to bet that droughts are not going to occur every year. With that, I believe these shares are still at least 30% undervalued.

Read the full article here:
Adecoagro's Discount Remains Stubbornly In Place

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