Monday, Oct 24, 2016
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Andersons' stock nears record high, but why is unclear



A suburban Toledo agribusiness has vaulted into the highest price local stock, but reasons are not clear.

Shares of The Andersons Inc. closed yesterday at $41.98, just 35 cents off of its record high set four months ago and now has a string of 12 closes in 13 trading days above $40. It is the only major northwest Ohio or southeast Michigan firm to be above that price.

Why? It appears to stem from investors' enthusiasm about the Maumee company's latest venture.

Analyst Mark Hughes said the most likely impetus for the rise is the firm's announcement this fall that it plans to build a second ethanol plant. It would provide another revenue source for its business in grain handling, general merchandise stores, and railcar rental and repair units.

"It looks like people are fired up over their ethanol plans, which sound promising," said Mr. Hughes, with Lafayette Investments in Ashton, Md.

"With oil prices staying as high as they are, ethanol is a good counter to that," he added. "You are seeing more and more people getting into it and it's a natural for them because of their expertise in corn."

Andersons officials did not return repeated calls yesterday for comment.

The lofty stock price is especially significant because less than two years ago, the shares traded in the $8 to $15 range. The price soared past $20 in September, 2004, climbed over $25 the next month, and hit $30 early this year.

At that time, company executives cited an excellent harvest season, strong financial performances by other companies in its industry, and a continually improved profit forecast as the reasons.

The firm's growing railcar business has generated profits and sales, and experts say the ethanol plants, which won't be operating until at least next year, may also help the firm's bottom line. Ethanol distilled from corn is mixed with unleaded gasoline to fuel cars, reducing the need for as much foreign oil.

No major announcements have been made recently by the Lucas County company that might have jolted the stock price. The firm reported a month ago that it had a loss of $636,000 in the third quarter, compared with a $1 million profit a year earlier. But quarterly revenues had jumped 16 percent to $289 million from a year ago.

The company said at the time it expected to achieve its forecasted $2.20 to $2.50 a share profit for the year.

The stock, which began trading in 1996, had a brief appearance above $40 last summer, hitting its all-time high on Aug. 1 when it closed at $42.33. Shortly after, it dropped a few dollars, but climbed back over $40 on Nov. 17.

Typically, shares of Manor Care Inc. and Health Care REIT Inc., both of Toledo, are priced higher than The Andersons, which trades under the symbol ANDE on Nasdaq. Manor Care's stock closed yesterday at $39.82; Health Care REIT at $34.60.

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