For what it is, American Vanguard (NYSE:AVD)
is a good company. This small agricultural chemicals company does not
have the R&D resources to compete with companies like Syngenta (NYSE:SYT), Bayer (OTCPK:BAYRY), or BASF (OTCQX:BASFY) in novel crop protection ingredients, nor the scale to compete with companies like ChemChina
in large-scale generic crop protection, but it does have a solid record
of acquiring and marketing niche products for an array of row crops,
fruits, vegetables, and cotton.
The challenge I have
with American Vanguard is when the market runs ahead of itself by
overestimating what the company can be, as has happened in the past when
investors thought the corn boom established a "new normal" for sales or
when Zika would lead to a major sales opportunity for its mosquitocide.
Now I have similar concerns about SIMPAS, the company's entry into
precision agriculture. While the SIMPAS system seems legit, I think the
sales effort will be challenging, and I think the company will always be
challenged by its lack of proprietary R&D capabilities. As I think
$15 to $17 is a reasonable estimate of fair value, I don't see all that
much upside today.
Read the full article here:
Will Precision Ag Take American Vanguard To A New Level?
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