Whaddaya know? Ag’s starting to heat up again. I was going to hold off on announcing Monsanto Co. (NYSE: MON) (PPT: Buy) as a Jacksonian Core Holding stock until we got a little pullback, but as you’ll see from my charts, I want you all to be looking at it this week, in case it wants to do a Clark Kent into Superman “up, up and away” on us.
I’ve got some other ags I’ll be talking about as the week progresses, but this is one of my favorite holdings, and a company that I believe can be called “the GOOG of the agricultural world.” MON has anywhere from a three to five year lead on many of their genetically modified competitors in a number of different seed products, and in my mind, they are the biggest dog in what I believe will become not only the critical space in modern agriculture, but a highly lucrative one as well.
The difference between MON and a lot of these hot ag stocks (including MOS, which I also like) is their high level of quality “intellectual property.” Not only does MON own a stable of well known brands, but they also hold multiple patents on their genetically modified seed technology and are continuously working to create new forms of insect and weed-resistent, as well as drought-resistant crops which will bring yields up and global food prices down. As global protectionism raises its ugly head again during this recession, you want to own the top dog in the agricultural space, as it’s the also-rans who will suffer most from loss of global market share.
As I mentioned, the charts are looking portentous, with the daily chart showing a breakout of both the short term downtrend line and the consolidation zone formed by the price-volume bars. We may get a pullback here on lighter volume, as we are slightly overbought. But, with the ags running, it’s also as likely that MON could take off this week, which is why I wanted to get this pick out for your consideration:
The weekly show similar portent, with a low volume lift off out of the consolidation zone accompanied by the price crossing the 13 and 34 week moving average in a brisk fashion. The weekly chart corroborates the daily’s favorable oscillators as well, and shows our significant support and resistance areas for your target and stop setting. For my part, I will continue to hold MON in my core portfolio and trade around it using the targets indicated.
Monsanto remains my second largest portfolio holding.
Caveat: If you choose to purchase this stock , you’re in deep peril of being served Frankenfood Franks n’ Beans for your next Thanksgiving Dinner. You could also lose your food allowance. Be vigilant and opportunistic.
UPDATE: MON and fellow Aggie, ANDE off to the races, along with the sector. Look for a pullback to $87.80-ish for MON. Look for ANDE to bull-flag here ($17.65) but don’t wait too long… I think this is the move we were expecting.
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$POT almost made the watchlist video: http://www.finviz.com/quote.ashx?t=pot
How ’bout NG? you like?
bearish post from Cronkite earlier today regarding MON
could be just treachery
the charts look good
http://ibankcoin.com/cronkite/?p=4648
I like MON too and have traded it long a couple of times in the last 60 days. However, I’m expecting another pullback before I buy again and hold for a higher high.
I think a nice basket of junior PM miners is a smart move, but don’t have any favorites in the small’uns like that.
I will do more gold here soon.
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I know you have this one on your radar: http://www.finviz.com/quote.ashx?t=nxg&ta=1&p=d
Love the “Jacksonian” series. Keep up the good work.
I’ve been looking at MON for a while and almost jumped in last month in the low 70s. I’ve been kicking myself for not pulling the trigger. How much of a pullback are you expecting?
Great picture, but that’s exactly why I don’t eat salad.
Great post as usual. Check out this guy. Not for his vanilla writing or insights….but because his approach since 2007 has been very similar to yours.
http://www.kitco.com/ind/grandich/may012009.html
I know this wet weather is affecting crops but I’m not sure how to play it.
http://www.soyatech.com/news_story.php?id=13546
Long soya perhaps? (The thinking goes weather causes more soya to be planted, depressing fututres, but demand is up and some of the crop may fail due to weather. My luck, bumper crop. LOL)
Looks like I’m going to bank AT LEAST a 5% one day gain on my MVIS flyer I mentioned last Friday. They just announced this morning a green laser supply agreement with Corning…
RC- I have been watching it but not grabbed any yet.
Sleepy- if I could have my druthers, I would love a pull back (test) of that 38% fib line. I haven’t seen my druthers since 1993, however.
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Eric, I will check that out when I get back in the office, THX.
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Scum– my limited commodity knowledge really ends at the mineral stage. My interest in MON was engendered by a review of their burgeoning IP portfolio some three plus years back. Given that, I don’t see MON being overly sensitive to the vagaries of the bean markets.
If you have some info or personal expertise on those markets, I’d be obliged if you’d linked them up here, or maybe even did a short PeeG post on it.
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Wow, Jacksonian ag takeoff this morning.
ANDE up $1.08, finally clearing that triangle.
MON up $2.80 on a little bit better than average volume.
ATHR up nicely too.
I like MON too and have traded it long a couple of times in the last 60 days. However, I’m expecting another pullback before I buy again and hold for a higher high.
Dude, I am not trying to be an ass here, but I knew exactly when you sold, because that shit finally took off… 😉
BTW — I follow a cycle guy here, but I find that you can’t be too “certain” about when the cycle will turn… you just have to be patient.
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I bought it late on Friiday with the Artist tipping me off on it. You’ve sold me on this stock. You’re right it could be the google of ag.
Hello Jake,
My expertise comes from watching the weather here and surrounding states, as well as personal observations from driving down the road. Oil is more my forte, but everyone knows the story there, inventories high, marginal wells being shut off. My guess is the wheat will come in late and wet, but that’s all it is, a guess.
BTW, MON’s GM soya has left a bad taste in everyone’s mouth. FYI
Hey Jake, one more thought, Natty might be a good play this summer if the crops do come in wet, &/or we have a hot summer. Under $4 seems cheap to me, just sayin’…
PS: I am not saying play natty w/ equities, CHK, etc., so don’t say scummy sed buy CHK, okay?
BTW, MON’s GM soya has left a bad taste in everyone’s mouth. FYI.
In what sense? Actual taste wise, or other problems?
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Natty may be a play, but I’ll stick with earl after they just found 33 years worth of nat gas down in Ragin’ Cajun Territory. My thoughts are there is even more nat gas than earl in North America, between us and Canada.
And no, I am in no way describing Ragin’ Cajun in that first sentence.
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Hi Jake,
My impression was that MON tried to bully everyone and his dog to use their seed or be sued into plowing their crop under from cross contamination. Europe et al will not buy GM products. MON is the devil imo.
I’ll stick with earl after they just found 33 years worth of nat gas down in Ragin’ Cajun Territory…
Mebbe, but I don’t believe they can afford offshore exploraion w/ natty under four bucks. just an opinion.
Europe is stupid and protectionist. They are using the GM issue to continue coddling their shrinking ag base.
I have heard “MON is the devil” since I can remember, usually from some lefty who thinks the only genetic engineering we should do is the way the ancient Egyptians did it.
It’s a luddite argument, basically, and it hurts those who don’t have a lot of loose change to spend on their lunch.
I know, shocking.
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Scum —
The gas is on dry land — Caddo Parish, Northeast Louisiana.
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There’s dry land in Louisiana? Just kidding. Thanks for the link Jake, I may put up a blog post about it.
Jake, I am far from liberal, trust me. If monsanto forced me to plow under my crops there would be a problem, I promise you. As for Europe, I only mention it from a revenue perspective.
Hey Jake, Is the rights to all that gas owned by HK? If so wouldn’t that make HK the buy and hold of a lifetime?
A list of companies developing the Haynesville Shale formation:
http://www.rigzone.com/news/article.asp?a_id=75161
I understand that CHK actually got a piece of it too. That wsj article is the only one I could find that talks about it being that big. Everyone else is talking in terms of BCF.
My blog post:
http://pppad.blogspot.com/2009/05/eureka.html
If so wouldn’t that make HK the buy and hold of a lifetime?
Depending on the other sources of supply and the constitution of the mgmt team, I guess.
I like MON because of great IP and great management, for example.
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Actually, what T. Boone was saying about converting buses and such to natty makes sense, not just for him, but for consumers too. The UK might be able to import CNG from us instead of Russia too. A win-win woohoo!