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Tickers in this Article: MON, DD, SYT, MOS, POT, DBA
There has long been a school of thought on Wall Street that investors do well by ignoring the companies looking for gold, instead investing in those companies that sell the picks and shovels. While I agree strongly with that perspective, there's an important little detail that investors also do well to remember - just because you're NOT a commodity company, that doesn't mean that you can't trade like one!

Such would seem to be the fate of Monsanto (NYSE:MON), as this hi-tech leader in agricultural science gets buffeted by the concerns over the larger agricultural commodity space.

Growth Story in Disguise
For the most recent quarter (the company's fiscal fourth quarter), revenue grew 35%, with seeds and genomics sales up 27% and agricultural productivity sales up 43%. Gross margins were also solid, as this line item jumped 49% for the quarter. Although I'm sure some investors will be put off by the fact that the company posted a loss for the quarter, I'm not terribly concerned as the company's cash flow generation (a far more important metric in my book) remains strong.

Looking out over many years, it is difficult for me not to envision significant ongoing growth for Monsanto. While there are highly-motivated opponents to the genetically-modified (GM) seeds that Monsanto sells, the basic reality is that more people need to be fed on less land (and with less fresh water and, ideally, less chemical inputs). What's more, there's plenty of business to go around for Monsanto, Syngenta (NYSE:SYT), DuPont (NYSE:DD) and competitors that have yet to emerge on the world stage. And though I'm sure that Monsanto will continue to get a Wal-Mart-like rap for the crime of being very good at what it does, I think it will be well-nigh impossible to stem the tide of more GM crop plantings around the world.

Plunging Commodity Prices a Threat?
In the meantime, people are clearly worried about the commodity markets. The recent earnings report from Mosaic (NYSE:MOS) led to a significant market freak-out, and agricultural commodities (whether measured individually or via an ETF like PowerShares DB Agriculture (NYSE:DBA)) have been soft. Add to that the fact that banks are significantly slowing down lending (and farmers are big borrowers), and you can see why Monsanto has been weak. That's the theory anyway.

In reality Monsanto is not a commodity chemical company like Mosaic or Potash Corp. of Saskatchewan (NYSE:POT), and while crop futures prices are lower, corn and soybeans are both roughly double the prevailing prices of the early 2000s. As for the bank credit issue, I'm a little more concerned about this one, but the Federal Reserve Bank of Kansas City has recently said, in essence, "so far, so good."

Bottom Line
It is clear from recent trading that Monsanto is not a stock for those investors who live and die by every tick of their portfolio. For me, though, I love the idea of companies that play on ongoing (and perhaps never-ending) secular trends - people like to eat; they like to drink. To that end, I might look at the downswings in Monsanto as a chance to start a small position of my own. Monsanto isn't the cheapest stock around, but if you wait for growth stories to get as cheap as value stocks, you don't end up owning very many of them.

To learn more about investing in agriculture, read our related article Grow Your Finances In The Grain Markets.

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