American Vanguard Corp. (AVD) recently suffered a large hit to its stock price, losing close to a third of its dollar value. The specialty chemicals company, however, is poised to recover in the third quarter, presenting investors with an opportunity in this undervalued company, says Daniel Rizzo, Analyst at Sidoti & Company, LLC.
“My favorite stock right now is a company called American Vanguard. The stock is cheap now; it obviously took a hit last week. I think the stock was down roughly 30%, 30-odd percent. Because they preannounced a bad quarter, in my opinion, that was a lot of what — the problems they have there are weather-related and are just a timing issue. They will probably recoup most of that in the third quarter, and I think the stock is currently undervalued,” Rizzo said.
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Rizzo thinks AVD will benefit from an uptick in the demand for corn. He says corn prices are currently low because of an increased acreage right now, but that the increased acreage will results in increased demand for herbicides and pesticides.
“For American Vanguard in particular, they don’t have a lot of competition for one of their main products that corn is grown, insecticide, and demand is high because of rootworm problem and just because of traditional corn, and corn planting has led to some other methods of killing pests to be less effective. So I think they are in a unique position,” Rizzo said.
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