This is going to sound a little strange, but both my girlfriend and I, days apart, had dreams where we were shown that it would be good to invest in African seeds. It was clear in both dreams that it had something to do with actual plant seeds.
I’ve never received investing advice in a dream before, but when my girlfriend had the same advice in her dream, after not knowing anything about my dream, I started to wonder.
Anyway, I’ve been doing some reading on what is happening with the seed industry in Africa (and the world) and I’ve now become very interested in this topic. It seems to me that there is a growing demand for non-GMO seeds, and I think Africa could have a lot to do with this shift in attitude.
Do you have any advice for a would-be African seed commodity investor? I have about $10,000 that I keep freed up as high-risk money.
Seedless in Seattle
I believe it may actually be possible to make your dream a reality.
Seed Co Limited claims to be Africa’s leading seed company, and its shares trade on the Zimbabwe Stock Exchange. They develop and market a wide variety of crop seeds (maize, wheat, cotton, and soya) in 15 African countries. Their operations are concentrated in Southern Africa with Zimbabwe, Zambia and Malawi accounting for more than 80% of revenue. Seed Co’s goal, however, is to “dominate agro-industry” on the continent, so they’ve recently been making moves into Eastern and Western Africa, too.
While the company does not appear to have a strict stance against GMO seeds (they have a research agreement with Monsanto), Zimbabwe has banned GMO seeds, and the company’s chief executive recently said that GMO seeds aren’t a panacea for raising crop yields.
But before you wire money to Zimbabwe, keep the following in mind.
In the company’s 2013 fiscal year (which ended on March 31), earnings per share dropped a gut-churning 35%. This resulted, in large part, from a sharp reduction in grain seed sales due to low commodity prices and power supply problems, and from the dramatic revaluation of the Malawian kwacha. These things are largely out of management’s control, but such wild reversals in fortune are something to steel yourself for if you intend to become a shareholder. I’d hate for your dream to become a nightmare.
Seed Co’s share price has dropped over 9% so far this year and now sports a P/E ratio of 10.6. Management has not yet announced a 2013 dividend, but if it remains at the same level as last year (not a certainty), the stock’s yield would be 2.4%.
Because the company’s 2013 results have just been released, I’d watch the stock’s price closely over the next few weeks. A big drop might offer a nice buying opportunity, and, if management maintains the dividend at current levels it could signal confidence in improved results for 2014.
If you’d like to buy Seed Co stock, you’ll need to open an account with a Zimbabwean stock broker. You can find more info on that right here.