The Zacks Analyst Blog Highlights: Monsanto, E. I. du Pont de Nemours, Dow Chemical, Google and Fossil Group


For Immediate Release
Chicago, IL – March 20, 2014 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Monsanto Company (MON-Free Report), E. I. du Pont de Nemours and Company (DD-Free Report), Dow Chemical Company (DOW-Free Report), Google (GOOG-Free Report) and Fossil Group (FOSL-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday’s Analyst Blog:

GMO Tide Rising: 3 Stocks to Benefit

According to recent data from the U.S. Census Bureau, the world's population has already crossed 7.1 billion and is likely to surpass the 10 billion mark by 2055. Concerns about the depletion of available natural resources have come to the forefront.

In order to address this issue, efforts are made to step-up global crop production by expanding cultivable land area, increasing the frequency of cropping and increasing yields. However, despite sincere execution, certain impediments have arisen.

This has brought Genetically Modified Organisms (GMOs) into play. GMOs are organisms whose genes have been altered using various methods. These are the primary source of genetically modified crops. However, over the years, the use of GMOs for the society’s well-being has been a hotly debated topic. While a group of scientists considers GMOs to be environmentally hazardous, others regard them as a necessity for increasing crop yield.

Before we suggest the stocks that are poised to benefit from the GMO backdrop, let us take a quick look at the advancement so far.     

GMOs: The Pros & Cons

Supporters of the environment-safety movement argue that GMOs might leak into the wild and altar ecosystems. However, it has been proved that none of the crops is enduring enough to disrupt the natural flora. Another concern revolves around the possibilities of unintended genetic changes in the crop. It has been argued that the process of gene insertion and tissue culture can result in unintended genetic changes.

The other school of science believes that the advantages from GMOs outpace the so-called negative effects. Not only are they safe, but are also economically viable. Moreover, GMOs reduce the use of synthetic chemical pesticides that are harmful to the environment.

For a large number of genetically modified crops, the modified genes never enter the food supply since they are removed during processing. It has been proved that genetically modified sugar beets are chemically equivalent to the non-modified ones, while oil extracted from soybean, cottonseed and corn are identical to oil from natural crops. 

Adoption So Far

Based on positive feedback and an incessant need to feed the growing population, some countries have accepted GMOs, although with certain conditions. As on 2012, 42 countries in the European Union (EU) along with other nations required the products containing genetically modified components to be labeled. Some EU countries including Switzerland, Austria and Hungary banned the usage, while others have been selective in their approval. However the biggest propagators, the U.S. and Canada, have accepted GMOs without any adjustments.

Commercial usage of genetically modified crops was first approved in 1996. Currently, the total plantation has increased to 167 million acres of land worldwide. The U.S. is by far the largest producer of these crops, accounting for two-thirds of the world's production. The National Center for Food and Agricultural Policy estimates that 85% of the U.S. corn is genetically modified. Other modified crops include cotton, soybeans, canola, squash and papaya.

Other regions that approve of the modified crops usage include Argentina (modified soybeans), Canada (modified canola), China and South Africa (modified cotton), and Brazil (modified soybeans). 

These crops are mostly needed when a natural calamity occurs and when farmers are unable to produce the required yield through the same resources. Proper usage of these crops lowers production costs, reduces pest problems, lowers use of pesticides and improves yield, per the National Research Council. Gauging from these factors, we believe the future of the genetically modified crops is bright.

3 Stocks to Benefit from the Wave

Of course, the direct beneficiaries would be the companies that are manufacturing genetically modified crops. Here are three such companies that we think would stand out:

Monsanto Company (MON-Free Report): Based in Missouri, this Zacks Rank #3 (Hold) stock is considered the biggest player in the modified foods industry. The company’s most accepted and widely used technology is the Roundup Ready system for soybeans, developed in 1974. Monsanto is trading at a forward P/E of 21.6x and has long-term expected earnings growth rate of 13.5%.

E. I. du Pont de Nemours and Company (DD-Free Report): Another major player in the genetically modified market is DuPont. This Zacks Rank #3 stock offers protection for crops like corn, cotton, potato, soybean, vegetable, rice, peanut and tobacco. It is trading at a forward P/E of 15.2x and has a long-term expected earnings growth rate of 8.5%.

The Dow Chemical Company (DOW-Free Report): This Zacks Rank #2 (Buy) stock deals with products like crop-enhancing traits, healthy oils, residential pest control, crop protection products, and vegetarian management solutions. The company has a forward P/E of 16.8x and a long-term expected earnings growth rate of 9.62%.

Fossil to Make Android Watches

Watches are going to get a whole lot more interesting this year, as Google (GOOG-Free Report) has released Android Wear, its wearables SDK for developers.

Google’s close partners LG and Motorola are likely to be the first ones with an Android watch going by their announcements yesterday. Motorola expects its Moto 360 to be available some time in the summer, while LG’s G Watch is expected in the second quarter. But they will soon be followed by watches from traditional partners Asus, HTC and Samsung, as well as fashion accessories maker Fossil Group (FOSL-Free Report).

Fossil shares jumped 4.6% following the announcement, as investors breathed a sigh of relief. Watches have not been a popular item of late, having gained the status of a discretionary item since phones started keeping time. The sheer variety has also made smart phones preferred gift items.

While Fossil’s watch sales improved somewhat immediately following the recession, they slumped again as pent-up demand wore off. The persistent weakness in demand led to increasing concerns for the future, so the collaboration with Google looks like a godsend.

Fossil is not new to the concept: the company did try making its own smart watch some time back. But the device was a flop and had to be scrapped. The Android OS and the advantages of using Google Now are likely to make the watches attractive. So the company may be able to leverage Android’s popularity to remain relevant in watches.

Fossil’s fashion customers are mostly women with an eye for fashion, so the “coolness” of the device will be an important factor. The company has also been expanding internationally, so Android-based value watches for emerging markets could also boost sales.   

For Google, the agreement holds promise because it automatically gets Android into a premium category.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on MON - FREE
Get the full Report on DD - FREE
Get the full Report on DOW - FREE
Get the full Report on GOOG - FREE
Get the full Report on FOSL - FREE
Follow us on Twitter:

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

Read the analyst report on MON

Read the analyst report on DD

Read the analyst report on DOW

Read the analyst report on GOOG

Read the analyst report on FOSL

Zacks Investment Research

View Comments (0)