BUNGE HAS LESS DOWNSIDE & MORE PRICE POTENTIAL THAN OTHER AG COMPANIES.


Buying stocks in this market has not been prudent of late. All good ideas have ended up worth less. They may, hopefully, end up profitable over time, but they sure affect the attitude and confidence during the downward spiral. Still buying or betting against is interesting and sitting on the sidelines is dull. So I've added Bunge, the South American agricultural giant. The stock is cheap, the business diversified by business and geography, the balance sheet is sound, and management competent. The spreadsheet compares other agricultural companies if one has decided that it's prudent to have exposure to farming and world population.

Down & Dirty Comparison

P/BV EV/EBITDA D/E OP.MARGIN ROA PEG FWD P/E
ADM 1.22 5.4 0.63 4.33 6.6 0.63 9.3
BG 0.66 2.9 0.49 4.99 7.42 0.36 4.97
MOS 1.6 2.7 0.19 32.35 21.97 0.93 3.04
POT 3.03 4.4 0.57 46.08 24.67 1.27 3.64
AG 0.85 2.97 0.31 6.56 7.28 0.36 5.21
DE 2.07 8.6 3.43 10.99 5.05 0.76 8.12
ANDE 0.54 3.8 1 3.73 6.93 0.4 4.84
VMI 2.05 5.86 0.48 11.99 11.69 0.67 10.81
LNN 1.87 4.87 0.17 13.1 13.67 0.46 9.39
MON 4.38 12 0.19 25.39 11.64 0.63 14.81

I apologize for the zigzag pattern that the spreadsheet came over from the Mac to the blog program, but you can follow the numbers with a little effort, after all I created it at great effort.

BG sells at the lowest percentage of book with only The Andersons lower, but they are having issues. You can also buy it for near the bottom of multiples of cashflow. Debt isn't excessive. You buy the growth at a PEG ratio of only .36 and forward earnings are only 5 times. Even if analysts estimates are off by half, you buy the company for a forward P/E of 10.

Bunge is a reasonable bet for the long haul. I hope it doesn't prove to be a nightmare in the short run.