The Rising Influence of Rising Affluence

[DewDiligence]

Barron’s bullish on MON’s ‘TGDT’ vig and relatively cheap valuation:

http://www.barrons.com/articles/monsantos-shares-engineered-for-growth-1450511080

Monsanto is predicting a slingshot year for earnings—a modest pullback in the current fiscal year through August, followed by a launch into fast growth that could double earnings within three years. Management’s plan relies mostly on new products and the absence of some one-time drags on recent results, not on a sharp improvement in farm economics. Meanwhile, Monsanto shares are down 20% in 2015. Over the past five years, they have fetched an average premium of 43% to the Standard & Poor’s 500 index, relative to forward earnings estimates. Now the premium is just 5%.

The company benefits from a clear long-term demand driver: more and hungrier mouths. The world’s population, now 7.3 billion, is expected to expand by more than a billion by 2030. The global middle class by then could balloon from two billion people to five billion. Higher incomes generally bring rising demand for meat and milk, and that requires more grain.

In the rich world, there is vocal opposition to genetically modified seeds—and a lucrative trade in organic food. Realistically, however, to avoid widespread hunger or the ecological disaster of turning far more forests into farms, the world will need to steadily increase the amount of food it can grow per acre.

Quite so.