Pat McKeough responds to many personal questions on stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions.
This week, an investor asked about one of Canada’s growing commodity investments. As a manufacturer and distributor of grain handling equipment, Ag Growth International plays an expanding role in agricultural markets in Canada and internationally. Pat discussed its opportunities and the challenges it faces.
Q: Hello Pat: Would you please give me your opinion on Ag Growth International as a buy, sell or hold? Many thanks for the help over the last year. Regards.
A: Ag Growth International Inc. (symbol AFN on Toronto; www.aggrowth.com), is a leading maker of portable and stationary grain-handling, storage and conditioning equipment. The company is based in Winnipeg.
Ag Growth sells its products through dealers and distributors in 48 states and nine provinces, as well as in overseas markets, including Russia, Ukraine and Kazakhstan. Ag Growth gets about 60% of its sales from the U.S., followed by Canada (23%) and overseas (17%).
Ag Growth’s subsidiaries include Batco (which makes crop conveyor belts), Wheatheart Manufacturing (grain-handling equipment), Westfield Industries (portable grain augers to transfer grain), The Edwards Group (aeration and grain-drying equipment), Twister (galvanized grain bins) and Mepu Oy (portable and stationary grain-drying systems).
As a member of my Inner Circle, you will get individual answers to your personal investment questions. And you will see my answers to questions other investors like you are asking. In fact, you will get virtually all the investment advice I have to give. You will have access to all of our advisories – The Successful Investor, Wall Street Stock Forecaster, Stock Pickers Digest and Canadian Wealth Advisor – and full access to the members-only, password-protected Inner Circle section of The Successful Investor Network website.
Although my team carefully researches all the stocks that members ask about, I personally review each and every recommendation. To ensure this close personal attention, only a limited number of members can be admitted to our Inner Circle. Under the pressure of world events, even more investors are asking for my personal investment advice. We are nearing our membership limit already. Click here to secure your membership in the Inner Circle right away.
Commodity investments: Acquisitions help offset weakness in other operations
In the three months ended June 30, 2011, Ag Growth’s sales rose 14.8%, to a record $88.1 million from $76.7 million a year earlier. Earnings rose 3.1%, to $12.0 million from $11.6 million.
The company’s sales were particularly strong in western Canada. As well, contributions from Ag Growth’s recent acquisitions (the most recent was Nebraska-based Airlanco, purchased for $11 million U.S.) helped offset weaker results from its overseas operations due to the stronger Canadian dollar.
On June 30, 2011, Ag Growth’s long-term debt was $129.9 million, or a reasonable 26.9% of its market cap. The company pays a monthly $0.20 dividend, which yields a high 7.5% on an annualized basis.
You can see Pat’s recommendation on AgGrowth International in this week’s Inner Circle Q&A. In his buy-hold-sell analysis, he looks at the impact of developments in seed technology, land management and crop storage on AgGrowth’s business. Pat also looks at how the company is handling the added risk as it grows by acquisition.
Inner Circle members see Pat’s analysis and recommendations on the stocks other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this special investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.
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