Syngenta's stock is at a crossroad

Posted Oct 7th 2009 5:15PM by Joseph Lazzaro
Filed under: Stocks to Buy

Crop protection and seed company Syngenta Ag's (NYSE: SYT) stock has underperformed since the June 16, 2009 Buy recommendation at $47.82.

The stock did break through the psychologically-significant $50 level, but it failed at level and has since fallen back to the $45-range. In the process, a double-top -- a bearish sign -- has formed.

Typically, the call at this juncture would be to stand-aside, but given the probability of solid revenue gains in FY2010 on rising demand for both seeds and crop protection in emerging markets, I'm reiterating the Buy recommendation. SYT's double-top is significant, but not enough, at this juncture, to justify kicking the stock.

However, the Sell/Stop Loss has been has been raised to $28 from $22, in the event of a milder-than-expected global recovery.

Stock Analysis: Syngenta Ag is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in SYT now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your SYT position before December 2009. Revised Sell/Stop Loss if you bought shares in this company: $28.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: agriculture, crops, seed, Syngenta Ag, SYT