Over the last 5 years, practically every currency except the Yen has outperformed the U.S. Dollar. Some people believe that Gold has outperformed all currencies, but one currency has outperformed Gold, the New Zealand Dollar. During times of massive worldwide monetary inflation, food prices increase the most, and New Zealand has the world's largest advanced agricultural based economy - and is currently the world's #1 exporter of dairy and sheep meat products.
For U.S. investors, there are two ways to capitalize: If you have access to overseas NZX trading, PGG Wrightson (NZX: PGW) is New Zealand's most iconic agriculture company. It has been around for 160 years and currently has over NZ$1 billion in revenues with 16.5% of New Zealand farmers buying their supplies from PGW's 100 rural supply stores located across the nation. PGW is trading at a 7-week high of $0.42 and paid a dividend last year of $0.032 for a yield of 7.6%. Their 2014 EPS is expected to increase by 100% to $0.04 for a P/E of just over 10, and their dividend could rise to $0.04 for a yield of 9.5%.
If you don't have access to the NZX, Agria (NYSE: GRO) owns a controlling stake in PGW. In fact, PGW's Chairman and largest indirect shareholder Alan Lai actually doesn't directly own any PGW shares, but instead owns 45% of GRO's shares outstanding. GRO closed last week at only $1.47 when its PGW ownership has a current market value of $1.94 per share or 32% above its current share price. In addition, GRO owns 100% of a China seeds business with $17mm in revenues and 98% revenue growth. GRO has been rapidly reducing its debt with remaining net debt of only $5.5mm. If you add just a 1X sales valuation for China seeds and subtract its net debt, GRO belongs at $2.15 or 46% higher than it is today. With PGW reporting first half 2014 results on February 25th, look for GRO to gain 46% within 6 weeks. We own 550,000 GRO shares and intend to sell after it rises substantially higher.