Important points
The three top performers created when the DowDuPont experiment unwinded in 2019 have now split into two. CNBC’s Jim Cramer said Friday that Corteva’s “Vyler” spinoff is “very much a farewell for me.” Agricultural science company Corteva’s stock price has tripled since becoming an independent company. Now, more than seven years later, the company is trying to recreate that magic. On Thursday, Corteva spun off its advanced seeds and genetics business as Weiler. The remaining companies specialize in crop protection. They have many of the same customers, but their economic situations are very different. “I think Weiler is the one to own in this case,” Kramer said on “Mad Money.” “Corteva needs to prove itself before I can join crop protection efforts. I like this Weiler right now.”Here’s why. Genetically modified seeds are a high-tech, high-margin business. Crop protection is more of a commodity business. Kramer said his favorite chemical analyst, Frank Mitch of Fermium Research, believes that Byler is a top-of-the-line product while Corteva has become “a sham story, even though it has a good management team.” Other factors in its favor include Beiler’s large research operation, which develops so-called seed traits and licenses the genes to other producers in exchange for royalties, and its impressive pipeline. Barring any major acquisitions, Byler is looking at stock buybacks of about $1 billion a year from 2027 to 2029, along with a modest dividend. “Regular viewers know that I like big buybacks,” Kramer said. However, based on its price-to-earnings ratio, Byler is not a cheap stock. The stock trades at more than 30 times this year’s expected earnings per share and more than 25 times next year’s expected stock price. “I think it’s worth that premium, but it means they have less room for error,” Kramer said. As for the rest of Corteva, he said the stock trades at 23 times this year’s expected EPS and 20 times next year’s expected EPS. “There’s a reason for that. Corteva is a stagnant part of the business,” Kramer said. Subscribe to CNBC Investing Club today to follow Jim Cramer’s every move in the markets. Questions about Cramer’s disclaimer? Call Cramer: 1-800-743-CNBC Want to delve deeper into Cramer’s world? Punch him! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Have questions, comments, or suggestions about the Mad Money website? madcap@cnbc.com
