Stock Option Advisory

Monsanto (MON) Sees Second Quarter Profit Surprise

Saint Louis based Monsanto (MON), a leading seed company, announced a strong second quarter profit. In fact, the earnings release showed profit more than doubled from the previous year’s second quarter. The news was inspiring to stock trading and many investors added the company to their trading portfolio. Some analysts noted the company’s 2008 earnings forecast in their lists of stock warning signs.

Monsanto earned $1.13 billion during the quarter which ended February 29, or $2.02 per share. This was up from $543 million or 98 cents per share from the previous year’s second quarter. A strong 45% surge in revenue, from $2.6 billion to $3.8 billion was a big contributor to the company’s growth. Corn seed, one of the company’s leading products, saw $1.7 billion in quarter revenue, up from $1.2 billion the year before.

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The most inspiring news for long-term stock trading strategies was the fact that the earnings smashed analyst expectations of $1.72 per share. The 30 cent per share throttling gave the stock help as traders had been conditioned to expect somewhat less from the earnings report.

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Monsanto forecast 2008 earnings of $3.15 to $3.25. This was very similar to the $3.20 forecast by analysts. Some traders using long-term stock trading strategies with the company might have used the similar annual outlook as a reason to look to covered call strategies or covered call investing with the stock. While the earnings forecast appears impressive, it implies Monsanto thinks things could slow the rest of the year compared to analysts. The stock was down slightly following the announcement.

In the last several days since the announcement, long strategies have kicked back in as the stock has spiked to a current position just shy of $120. One year target estimates place the stock at $139.45. Combined with the 70 cents per share annual dividend currently offered by the company, Monsanto seems like a good addition to a personal stock portfolio.

Motley Fool, a leading stock research company, recently noted Monsanto as one of its leading stock steals. They noted its strong price-to-earnings ratio as reason for investors to take advantage of its current price position.

Monsanto is trading near the top end of its 52-week price trading range. In the past year, the company has peaked at $129.28, and reached a low of $56.75. The broad range from the low to the high suggests much implied volatility for the stock. Traders seem to be very high on the stock with its current performance. The scrutiny over its $3.15-3.25 per share expected earnings for 2008 show just how much the stock market expects from the company.

The good news about the seed industry is that it is important around the world, even in down economic situations. Monsanto has seen strong growth globally, but unlike many companies, it has also seen excellent sales growth in the US.

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[tags] Saint Louis, 2008, Motley Fool, US, MON, Monsanto Co., covered call investing, covered call strategies, implied volatility, investing in stock options, personal stock portfolio, poweroptions, stock help, stock investing, stock market help, stock market investment strategies, stock options, stock research, stock trading, stock warning signs [/tags]

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