Drought Benefits Two Irrigation Companies
Drought is a major concern in the Midwest, but the natural disaster is actually your friend if you own irrigation equipment makers.
Farmland is still thirsting for more moisture, despite winter snowstorms in the Great Plains states. The most severe drought conditions are in South Dakota, Nebraska, Kansas, Oklahoma and Texas, according to the U.S. Drought Monitor at the University of Nebraska-Lincoln.
Sales for mechanized irrigation equipment were strong in 2012 for Lindsay Corporation(NYSE: LNN) and Valmont Industries (NYSE: VMI), both based in Omaha, Neb. I expect sales in 2013 to grow even more. Farmers are flush with cash from strong income in recent years. They have been buying land and upgrading equipment for their operations.