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All it takes is some news to make you realize the risk involved in smallcap investing. That news came in the form of a horrific earnings report last night from Origin Agritech (NASDAQ: SEED), showing revenues and margins decreasing along with guidance that was more than 50% below the estimates of the one analyst that covers the company.

I often advise against trusting any company whatsoever, but it's rare that one lets investors down so greatly. I had no position in the stock, but along with Converted Organics (NASDAQ: COIN) and Titan Machinery (NASDAQ: TITN), I profiled Origin back in January as an up and coming agriculture stock. Since then, two of those three stocks have broken out to new highs in a similar fashion to this hot sector's leaders like Potash Corp. of Saskatchewan (NYSE: POT), Mosaic (NYSE: MOS), Monsanto (NYSE: MON) and Agrium Inc. (NYSE: AGU).

Performance aside, those billion dollar behemoths are established companies, with global investors and brands, while these new kids on the block are the exact opposite. Plagued by having few products, fund raising problems and debt issues, this 50% shortfall exemplifies just one of the many issues with which small-cap companies struggle. I mean they are really fighting for lives! And that's why they are priced the way they are and derided by Wall Street.

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Not all agriculture stocks are created equal originally appeared on BloggingStocks on Thu, 28 Feb 2008 10:22:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>agriumagucoinconverted organicsConvertedOrganicsfeaturedmonmonsantomosmosaicorigin agritechOriginAgritechpotPotash Corp. of SaskatchewanPotashCorp.OfSaskatchewanseedtim sykesTimSykestitan machineryTitanMachinerytitnThu, 28 Feb 2008 10:22:00 EST