Back to top

Aggressive Growth

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.

Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.70 +4.23%
BANCO DO BR… BDORY 14.49 +3.87%
WEATHERFORD… WFT 23.75 +3.45%
AIR INDUSTR… AIRI 9.89 +3.13%
EQT MIDSTRE… EQM 97.64 +2.85%