American Vanguard Corp. ( AVD - Snapshot Report ) is leveraging strong market demand for soil insecticides as U.S. corn growers contend with pest problems. The California-based maker of diversified specialty chemicals has racked up five positive earnings surprises in the past seven quarters, and its share price has rocketed roughly 153% year-to-date.

With a projected long-term earnings growth of 25%, rising estimates and favorable industry trends, this Zacks #1 Rank (Strong Buy) stock is a good bet for aggressive growth investors.

American Vanguard Tops in Q2

On August 2, American Vanguard posted earnings of 30 cents per share for the second-quarter 2012, topping the Zacks Consensus Estimate by a nickel and exceeding last year’s earnings of 22 cents. Profit surged 46% year over year to $8.7 million, buoyed by higher demand for the company’s soil fumigants and insecticides.

Revenues rose 6% year over year to $84.8 million. Gross margin increased to 45.2% from 39.6% a year ago, aided by the company’s sales and marketing efforts and operational efficiency. Operating margin rose to 16.8% from 13.3% in the prior-year quarter as higher sales more than offset an increase in operating costs.

American Vanguard was relatively unaffected by the Midwest and Southwest drought in the second quarter. The company envisions continued demand for its post-harvest soil fumigants and cotton insecticides in the third quarter.

Rising Earnings Estimates

The Zacks Consensus Estimate for 2012 has moved up roughly 3% in the last 30 days to $1.15 per share, representing an estimated annualized growth of around 44%. For 2013, the Zacks Consensus Estimate rose by roughly 4% to $1.41 per share, indicating an estimated growth of nearly 22%.

Valuation: Stretched but Warranted

American Vanguard trades at a significant premium to its peers by most metrics. The company is currently trading at a forward P/E of 30.37x, a roughly 79.6% premium to the peer group average of 16.91x. Its trailing twelve months P/E of 35.02x is well above the peer group average of 18.92x. The price-to-book of 4.74x is also much higher than the peer group average of 1.84x. Moreover, the price-to-sales of 2.96x is above the peer group average of 1.00x. However, given the strong earnings trajectory, the premium valuation should not scare investors away.

Strong Technicals The one-year chart below shows bullish technical indicators for American Vanguard. The stock broke the 50-day moving average twice, in late-November 2011 and early-August 2012. The latter came on the heels of the strong second quarter results.

Moreover, the stock has been incessantly trading above the 200-day moving average since November last year. Notably, the 50-day moving average continues to read higher than the 200-day moving average, with the 200-day moving average acting as the support level.

Founded in 1969, American Vanguard makes specialty chemical products for agricultural and commercial applications. The company, which competes with Aceto Corp. (ACET) and FMC Corp. (FMC), develops and markets an array of chemicals, including insecticides, fungicides and herbicides, for crops, human and animal health protection. American Vanguard, which has a market cap of roughly $978 million, has the largest assortment of corn soil insecticides coupled with the most advanced dispensing equipment.

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