From the Globe and Mail:
For investors bullish on global agriculture but leery of volatile commodity markets companies that sell farm equipment can offer an attractive way to bet on rising food prices.
One of the more intriguing stocks in the sector is Ag Growth International Inc., (AFN-T45.80----%) an equipment maker that is expanding from its base in Winnipeg into markets overseas. It’s on track to increase sales by 23 per cent this year, while paying an attractive 5-per-cent dividend yield. Its shares have returned 42 per cent over the last 12 months, and analysts say there is room for further gains.
Ag Growth makes gear for grain handling, storage and conditioning. Its products – augers, conveyors, bins, aeration tools and drying systems – aren’t flashy, but are essential for getting grains out of the fields and into the market.
Chief executive officer Gary Anderson says growth in the next few years will come from some of the countries that made up the former Soviet Union, as well as from Latin America, China and southeast Asia. In pursuit of international sales, Mr. Anderson and his team spent almost $40-million on three acquisitions last year.
One key acquisition was a Finnish company called Mepu Oy, which provides Ag Growth with a European beachhead. The Winnipeg firm also gobbled up U.S.-based Tramco Inc., a maker of heavy-duty chain conveyors, in a bid to strengthen its position in Latin America, the Netherlands and China, and to expand into grain processing for the first time....MORE