American Vanguard’s (AVD - Free Report) fully-owned unit AMVAC Mexico Srl has completed the purchase of specific herbicide and fungicide products sold in Mexico from Syngenta AG. Financial terms of the deal were not divulged.
The products acquired by AMVAC Mexico includes seven branded selective herbicides for sugar cane and eight contact fungicide brands. These products have generated sales in the range of $8-$10 million in the recent past.
The divestment of these products results from Mexico's antitrust commission, COFECE’s resolution (dated as of Apr 7, 2017) associated with the acquisition of Syngenta by China National Chemical Corporation (ChemChina).
American Vanguard noted that the addition of these products complements and strengthens its herbicide and fungicide offerings. AMVAC Mexico has been operating in the Mexican crop protection market for more than two decades and is also expanding its foothold in this market.
American Vanguard’s shares gained 18.1% over the past year, outperforming the 0.6% decline of the industry it belongs to.
American Vanguard saw its profits jump around 33% year over year in second-quarter 2017, helped by its cost control initiatives. Sales also rose in the quarter, partly driven by strong demand for cotton products.
The company saw healthy gains in international sales and growth in its granular soil insecticide products in the quarter on the back of higher demand in domestic corn, peanuts and sugar crops. This more than offset weather-related declines in soil fumigant sales and pricing pressure in corn herbicides.
American Vanguard, in its second-quarter call, said that its outlook for the remainder of 2017 is positive. The company noted that significant increase cotton acreage in the U.S. should provide additional sales of its Bidrin foliar insecticide and Folex harvest defoliant in the second half of 2017. American Vanguard also sees modest international growth and a rebound in its soil fumigant business.
Moreover, the company expects continued demand for its Dibrom mosquito adulticide. American Vanguard remains focused on managing working capital and operational costs and investing in technology innovation for future growth.
American Vanguard currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-placed companies in the basic materials space include The Chemours Company (CC - Free Report) , Kraton Corporation (KRA - Free Report) and POSCO (PKX - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term earnings growth of 15.5%.
Kraton has an expected earnings growth of 7.2% for the current year.
POSCO has an expected long-term earnings growth of 5%.
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