American Vanguard Up 23% in 3 Months: What’s Driving It?

Shares of American Vanguard Corporation AVD have popped around 23% over the last three months. The company has also significantly outperformed its industry’s gain of roughly 0.1% to over the same time frame.
American Vanguard has a market cap of roughly $632.9 million and average volume of shares traded in the last three months is around 92.2K. The company has an expected long-term earnings per share growth of 15%.

Let’s take a look into the factors that are driving this chemical maker’s stock.

Driving Factors

Strong second-quarter results and favorable outlook have provided a boost to the company’s shares. American Vanguard’s profits jumped around 33% year over year in the second quarter, helped by its cost-control initiatives. Sales also rose in the quarter, partly driven by strong demand for cotton products. Both earnings and sales also topped expectations.

American Vanguard, in its second quarter call, said that its outlook for the remainder of 2017 is positive. The company noted that significant increase in cotton acreage in the United States is likely to provide additional sales of 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. The company remains focused on managing working capital and operational costs and investing in technology innovation for future growth.

Upbeat prospects stemming from acquisitions are also driving the company’s shares. American Vanguard’s fully-owned unit AMVAC Mexico Srl, last month, completed the purchase of specific herbicide and fungicide products sold in Mexico from Syngenta AG. The addition of these products complements and strengthens American Vanguard’s herbicide and fungicide offerings.

Moreover, the company’s fully-owned unit, AMVAC Netherlands BV, recently agreed to buy Grupo Agricenter, a well-established distributor of numerous crop protection products in seven Central American and Caribbean countries.

The acquisition will strengthen American Vanguard’s presence in Latin America, given Grupo Agricenter’s commitment to customer service, broad portfolio of products and in-depth experience in several markets. The move will not only expand AMVAC’s international foothold but will also enhance the company’s track record of successfully providing important solutions to farmers in the region.

American Vanguard currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the basic materials space include Kraton Corporation KRA, Kronos Worldwide, Inc. KRO and Orion Engineered Carbons, S.A. OEC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kraton has expected earnings growth of 7.2% for the current year.

Kronos has expected long-term earnings growth of 5%.

Orion Engineered Carbons has expected earnings growth of 19% for the current year.

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