3 Agricultural Stocks Poised to Benefit from Drought

Standard & Poor's says, "Monsanto's shares trade at a valuation premium to the S&P 500, reflecting what we see as above average earnings growth prospects. We forecast primary contributors being the introduction of next-generation seeds, and increased trait penetration in international markets, like South America."

E.I. du Pont de Nemours

Company profile: DuPont, with a market value of $45 billion, is a broadly diversified company, and known chiefly as the second-largest U.S. chemicals manufacturer. Its agricultural segment, which made up 24% of sales in 2011 and $1.5 billion of operating profit, includes Pioneer HiBred, the world's largest seed company, including corn and soybeans. The company is also a major global supplier of crop protection chemicals.

Dividend Yield: 3.62%

Investor takeaway: Its shares are up 5.7% this year and have a three-year, average annual return of 24%. Analysts give its shares four "buy" ratings, four "buy/holds" and 13 "holds," according to a survey of analysts by S&P, with the "holds" reflecting valuation concerns.

For fiscal year 2012, analysts' consensus estimate calls for earnings of $4.26 per share, (up 16% over the prior year), and analysts estimate that earnings per share will grow by 11% to $4.72 in 2013. Morningstar says DuPont's genetically modified seed business should "account for the lion's share of future growth for the company in both North America and emerging markets."

Syngenta AG

Company profile: Syngenta, a Swiss firm with a market value of $30 billion, operates worldwide selling crop protection in the form of herbicides, insecticides and fungicides, as well as a developer of a wide variety of seeds. Among its latest products is Invinsa, which is the first spray-on product to protect field crops from drought.

Dividend Yield: 2.19%

Investor takeaway: Its shares are up 15% this year and have a three-year, average annual return of 13%. Analysts give its shares one "buy" rating and six "holds," according to a survey of analysts by S&P.

For fiscal year 2012, analysts estimate it will earn $4.34 (up 25% year-over-year) and that that will grow by 13% to $4.89 per share next year. Morningstar analysts say that "with competitors concentrating on corn and soybeans, Syngenta has gained a solid position in the vegetable seeds market. The company expects this segment to grow as emerging regions demand more high-value vegetables in their diets."