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By Jennifer Yousfi
Fueled by a combination of international sales and a growing demand for genetically enhanced agricultural products, Wilmington, Del.-based E.I. du Pont de Nemours & Co., more commonly known as DuPont (DD), has emerged as one of the few bright spots in an otherwise gloomy U.S. stock market.
DuPont announced Wednesday that it expects full-year 2007 earnings to be at the high-end of its previously projected range of $3.15 to $3.20 per share. The science-focused conglomerate also boosted its 2008 earnings guidance to $3.35 to $3.55 per share.
"We expect that continued growth worldwide from our Agriculture & Nutrition business segment and growth from all of our segments in emerging markets will more than compensate for a slower U.S. economy," a statement., DuPont chairman and chief executive officer, said in
DuPont is the latest example of a U.S.-based biotech firm that's reaping major profits from surging overseas growth in key markets like Brazil, and that's benefiting from soaring demand for higher-yielding agricultural products and for fuels that can augment or, even replace, conventional gasoline.
Just last week, sector rival Monsanto Co. (MON) announced it nearly tripled its fiscal first quarter earnings, which rose from $90 million in 2006 to $256 million in its just-completed fiscal 2007 year.
DuPont – a component of the 30-stock Dow Jones Industrial Average – does business in more than 70 countries where the blue chip company's array of agricultural offerings are strong sellers. DuPont is a leading developer of crop-protection chemicals and seed hybrids.
The firm recently received approval for two new herbicides that are designed to protect soybeans and wheat. In addition, farmers using DuPont's Pioneer brand seed hybrids won top honors in national crop-yield contests for corn and sorghum last year.
DuPont's success reinforces two important trends that Money Morning has previously identified as key factors for investors to consider in order to maximize their profits – and their success. Some of the better investment opportunities will include:
- U.S.-based multinationals with a significant portion of their sales overseas, since those firms are well positioned to profit despite recessionary conditions and a weak dollar at home.
- And both companies and commodities tied into agri-business [agriculture chemicals, agriculture equipment, and so-called agri-product operations] are a smart play for 2008.
Emerging middle classes in China, India and elsewhere are driving the need for commodities. As more people incorporate meat and dairy products into their daily diets, supplies of "double-duty crops" – capable of feeding both livestock and people – continue to fall short of global demand. Drought and floods have also done their part to reduce crop yields.
Monsanto has benefited from similar catalysts. In fact, the stock was one of 2007's best performers, having soared more than 120%. Monsanto shares got a nice boost last week after the company announced that Latin American sales of its seeds and Roundup brand herbicide helped the company to nearly triple its fiscal-first-quarter profit.
These stunning results are largely due to sales of Monsanto's genetically modified seeds, which have been engineered to repel pests and be immune to herbicides. Like DuPont, Monsanto sales have benefited from soaring crop prices and an increased interest in alternative energy sources.
Reacting to DuPont's disclosures, investors drove the shares higher in recent days. The stock gained $2.02 [4.73%] to close at $44.77 on Wednesday. The company's shares tacked on an additional 1.12% yesterday (Thursday) to close at $45.28. DuPont's shares have traded between $42.25 and $53.90 over the past 12 months.
Monsanto shares have risen 9.04% year-to-date and closed at $122.04 yesterday.
News and Related Story Links:
DuPont offers hope to a beleaguered market
- DuPont News Release:
New DuPont™ Agility™ SG Herbicide Offers Wheat Growers Answers to Changing Weed Control Needs
- DuPont News Release:
DuPont Congratulates Growers Planting Pioneer® Brand Sorghum Hybrids in Winning Majority of National Categories in Yield Contest
- Monsanto News Release:
Monsanto Sees Record Sales in Fiscal Year 2007; Seeds and Traits Business Contributes to Strong Fourth Quarter and Year-End Results
- Money Morning:
Wheat Futures Break Into Double Digits, Stoking Inflation Fears
- Money Morning:
Monsanto Reaps Huge Rewards From Its Blossoming Seed Business