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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