The agricultural equipment maker, AGCO Corporation (AGCO - Free Report) recently entered into an agreement with CP Foods (CPF) to form a joint venture (JV) for manufacturing protein production equipment. AGCO will own 50% of the JV.
Headquartered in Bangkok, Thailand, CPF is a leading producer of swine, chicken and eggs in Asia. Meanwhile, AGCO’s GSI operations include the manufacturing and distribution of grain storage and protein production equipment.
Per the deal, the JV will produce protein production solutions for AGCO’s GSI division and CPF. This new manufacturing JV will significantly expand GSI’s Asian production capabilities.
On the other hand, the JV will also support CPF’s planned expansion in Asia to provide technologically advanced solutions, while enabling AGCO to better serve other animal protein producers in the region. Production under the JV is likely to begin in early 2019 in a plant which will be constructed in CiXi City, ZheJiang Province, China.
AGCO’s GSI sales in second-quarter 2017 were up nearly 20% year over year. The company projects the GSI sales to reach $1 billion in 2017.
AGCO is poised to benefit from its focus on acquisitions, JVs and cost-reduction efforts. The company has three acquisitions in the pipeline. These acquisitions will likely prove conducive to near-term growth.
In the past year, AGCO has outperformed its industry with respect to price performance. The stock gained 36.7%, while the industry rose 32.4%.
AGCO currently sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the industrial products sector include Caterpillar Inc. (CAT - Free Report) , Kaiser Aluminum Corporation (KALU - Free Report) and Komatsu Ltd. (KMTUY - Free Report) . All three stocks sport the same Zacks Rank as AGCO. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has expected long-term earnings growth rate of 9.50%.
Kaiser Aluminum Corporation has expected long-term earnings growth rate of 15.00%.
Komatsu has expected long-term earnings growth rate of 6.20%.
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