"Investing in food is a simple story: expanding supply and demand fueled by rising global urbanization," says Yiannis Mostrous. In Personal Finance newsletter the global advisor looks at Monsanto (NYSE: MON).
"The global population is expected to surpass 9 billion by 2050. Wages are rising in emerging economies--led by India and China--and more people are moving into cities where the consistent and better paying jobs are.
"That means greater demand for protein-rich foods, especially meat and dairy consumption. The consumption of both has a strong correlation to urbanization. The result will be a permanent increase in demand for crop grains for feeding.
"Monsanto is the undisputed leader in the genetically modified (GM) seed industry. Its business consists of two segments: Seeds/Genomics (seeds, traits, biotechnology, breeding, etc.) and Agricultural Productivity (crop protection, herbicide products).
"The company has been a favorite of mine for years because its leadership position virtually guarantees greater earnings growth and solid pricing power.
"This, in turn, means high cash flows and enhanced financial strength, a condition that gives the company the opportunity to allocate more funds toward research and to strengthen its product pipeline.
"The latest quarterly results proved Monsanto's primacy. Earnings beat expectations by 64%, driven by the strong performance of South American operations. The company also conservatively raised its guidance, which is to be expected given the state of the global economy.
"Nevertheless, the company's operational excellence should be able to deliver much better results once again, while its new first generation drought tolerant corn product is also progressing and should be available sooner rather than later."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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