Stock of the week: Genus
Global demand for pork, beef and milk is predicted to continue to rise, especially in developing countries, with their rising incomes, population growth and move to urbanisation. Therefore, a company that provides help for farmers to improve efficiency and the quality of its stock looks well positioned for the longer-term. Consumers want affordable, safe to eat and better quality produce and farmers are reacting to that with a growing use of genetics in breeding and improving their stock.
Genus applies science to animal breeding. Its non-genetically modified organism technology is applicable across all livestock species, but is only commercialised by Genus in the cattle and pig farming sectors. It is a provider of genetics and reproduction services, marketing in more than 75 countries. The group believes it has a competitive edge from having ownership and control of its breeding animals, along with the biotechnology used for further improvements, allied to its growing global supply and distribution network and increase spend on research and development.
In recent updates, the company has reassured investors that trading is in line with expectations and that markets remain ‘generally favourable’. Indeed, acquisitions, such as pig genetics specialist Hermitage, should help enhance the group’s global reach and boost royalty growth and the strategic review combined with the increasing focus on researching and sexing technology is expected to increasingly benefit the group.
This is a company that is establishing a niche for itself across the globe. The share price has moved higher since the results hit an all-time high in November, as analysts get excited about its gene editing program. As a result, we would recommend Genus as a medium to higher risk, long-term growth ‘buy’ for investors.