These are rough times for both agriculture and Brazil, but Adecoagro (NYSE:AGRO)
may yet be a stock that investors want to look at today. Calling a
bottom in agricultural commodities is a fool's errand, but the company
has more going for it than just the prevailing price of corn or soy.
Adecoagro has established a quality sugar/ethanol/cogeneration operation
in Brazil, and should be well placed to benefit from improving
conditions. It is also leveraged to the extremely discounted farmland
values in Argentina, and can benefit if a new government later this year
pursues a more rational set of economic policies.
Adecoagro hasn't outshined Cresud (NASDAQ:CRESY) since mid-July of 2013 (when I wrote up both stocks
as Top Ideas), but a 60%-plus improvement in the stock price since then
still isn't bad. I believe that it is more than 10% undervalued just on
the basis of its sugar/ethanol operations, and if economic reforms in
Argentina allow the real underlying value of the company's farmland
there to come to the surface, a fair value in the mid-to-high teens is
not out of the realm of possibility.
Read the full article here:
Adecoagro's Diversity Sweetens The Value
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