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- CNBC’s Jim Cramer on Friday offered his take on agriculture stocks Corteva and Vylor.
- Corteva spun off Vylor into a standalone company this week.
The top performer of the three companies created when the DowDuPont experiment unwound in 2019 has now split itself in two. Corteva’s spin-off of Vylor “is exactly my kind of breakup,” CNBC’s Jim Cramer said Friday. Shares of agricultural science company Corteva have tripled since becoming a standalone entity. Now, more than seven years later, it is trying to repeat the magic. On Thursday, Corteva spun off its advanced seed and genetics business as Vylor . The remaining company is all about crop protection. They have many of the same customers, but the economics are very different. “In this case, I think Vylor’s the one to own,” Cramer said on ” Mad Money .” “Corteva needs to prove itself before I’m willing to get on board a crop protection play. I like this Vylor right now.” Here’s why: Genetically modified seeds are a high-tech, high-margin business. Crop protection is more of a commodity business. Cramer said his favorite chemicals analyst, Frank Mitsch of Fermium Research, thinks Vylor is the cream of the crop, while Corteva has become “a show-me story, even if it has great management.” Other factors in its favor: Vylor’s big research business developing so-called seed traits and then licensing out the genes to other producers in exchange for royalties, with a great pipeline to boot. Vylor is thinking about roughly $1 billion in annual share repurchases from 2027 through 2029, excluding major acquisitions, alongside a modest dividend. “Regular viewers know I like big buybacks,” Cramer said. However, Vylor is not a cheap stock based on its price-to-earnings multiple. It trades at more than 30 times this year’s earnings-per-share estimates and more than 25 times next year’s numbers. Cramer said, “I think it deserves that premium. However, that means they have less margin for error.” As for the remaining Corteva, he said the stock trades at 23 times this year’s EPS estimates and 20 times next year’s numbers. “There’s a reason for that,” Cramer said, “Corteva’s the stagnant part of the business.” Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
