Monsanto Earnings Matter More Than GMO Worries

MON stock will be buoyed by EPS numbers more than it will be weighed down by the anti-bioengineered-food movement

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Monsanto Earnings Matter More Than GMO Worries

The switch is being hailed as a victory for food-safety activists who have been clamoring for food companies to migrate toward more natural (i.e., not genetically engineered) ingredients. After all, the public spoke, and forced the world’s largest packaged food company to make the change consumers want.

Problem: Not only is General Mills not moving to exclusively non-GMO sources — at least not yet — for any of its other brands, it’s not even switching to non-bioengineered sugars for its Honey Nut and Apple Cinnamon varieties of Cheerios. And even with the switch from a GMO-sourced corn starch, most estimates maintain that two-thirds of the food found on the average grocer’s shelves still have some sort of GMO ingredient in them.

In other words, the General Mills decision is just a drop in the bucket.

Still, all big journeys start out with that first small step. This is likely to be the shape of things to come for all packaged foods, even if it takes years to get to the final destination.

So what does this paradigm shift mean for Monsanto?

The Anti-GMO Movement Is Nothing for MON Stock Owners to Sweat

Truth be told, not much right now. Compared to the amount of seed and dried goods the company already sells vs. the amount of genetically modified corn starch being taken out the Cheerios recipe, Monsanto won’t even notice. If non-engineered seeds and plants do become the new norm, though, we might well see an overhaul of not just Monsanto’s products, but for all seed and food companies.

With all of that being said, the hype surrounding the consumer “victory” inside the Cheerios box — and even the momentum it may add to the anti-GMO effort — shouldn’t be a particular worry for MON stock owners.

Stand wherever you like on the merits or risks of genetically modified plant-based foods. Just know that if the laws change and ultimately, totally ban the use of bioengineered seeds (which is happening in some places), Monsanto still is going to be first in line to offer farmers non-modified seeds. That’s the advantage of size and deep pockets … the ability to put pressure on smaller providers while simultaneously employing a potent sales effort no matter what’s approved to sale.

In other words, even if the game changes, MON stock will be fine — Monsanto still is the best player on the field because it’s the biggest player on the field.

We all have to eat something, and at the end of the day, we’ll all pay whatever price we have to in order to avoid going hungry.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2014/01/mon-stock-monsanto-earnings-gmo/.

©2014 InvestorPlace Media, LLC

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