(MONEY Magazine) – When the midwestern floodwaters finally crested after four months of rain, the submerged area from St. Paul, Minn. to St. Louis, Mo. was bigger than Lake Ontario. Damage totaled some $16 billion. And 8 million acres of prime corn- growing land were lost for the season. Countless companies from food processor Archer Daniels Midland to local stationery stores lost millions of dollars. But a few major firms not only escaped serious harm during the flood but are even likely to benefit from it next year. The reason: The agricultural sector will bounce back faster than you might think after watching all the TV footage of floating silos and stranded cows. While it's true that the flood hurt midwestern corn production, not all of the corn planted on the 74 million acres was lost. Food analyst Bonnie Wittenburg at Dain Bosworth in Minneapolis notes: ''From the news, you'd think all of Iowa is underwater -- and it isn't.'' Grain surpluses will be reduced, and farmers can expect firm or higher prices next year. At the same time, the government will shore up U.S. grain production by allowing more acreage to be planted. In all, experts think farmers will boost corn acreage next year by at least 3 million acres, or 4%. Here are three stocks that analysts recommend, beginning with the one that could have the biggest gains: You can find Pioneer Hi-Bred (ticker symbol: phyb; recently traded over the counter at $29.75) near the top of any list of flood beneficiaries -- and for good reason. It is the leading U.S. supplier of hybrid seed corn. Not surprisingly, the seed business is highly seasonal. Pioneer collects two-thirds of its $1.3 billion annual revenues -- and all of its profits -- in its third fiscal quarter ending May 31. Following that pattern, Pioneer ; fortunately had booked record third-quarter results before the flood reached full force. Flood damage will hurt the company in the short run, though. When we first phoned Pioneer in late July, the company's Des Moines headquarters was without water and electricity, and much of the staff had decamped to the suburbs. More seriously, a small -- but still unpredictable -- part of the company's seed- corn crop will be lost, and customers are likely to return far more unplanted seed than usual. (It's standard for seed companies to accept returns.) For the year, however, the flood's adverse effects will be minimal. ''For all practical purposes, the flood won't affect this year's results,'' says George Dahlman, agribusiness analyst at Piper Jaffray in Minneapolis. ''The key is what happens next year.'' If corn acreage tops 77 million next year, as most analysts expect, Pioneer seems likely to enjoy strong seed demand. ''Seed prices won't go up a lot,'' adds Bonnie Wittenburg at Dain Bosworth: ''Pioneer isn't a company to gouge farmers in bad times.'' The analysts project that earnings could rise to $2.10 or more a share for the fiscal year ending Aug. 31, 1994, up 27% from $1.65 for the fiscal year just ending. Wittenburg figures that the stock could rise 34% to $40 over the next 18 months. Agco (OTC; agco, $16.75). With estimated 1993 sales of more than $500 million, this farm-equipment distributor has less than 10% of the U.S. market and is a fraction the size of competitors Deere & Co. and J.I. Case, a division of Tenneco. But the little tractor that could is showing strong earnings gains. Agco is actually a small farm-equipment conglomerate in Norcross, Ga. that was assembled over the past three years by the investment firm Hamilton Robinson & Co. The core consists of the remains of Allis-Chalmers, acquired by Germany's Kloeckner-Humboldt-Deutz in 1985 and then sold through an $89 million leveraged buy-out sponsored by financier Hamilton Robinson in 1990. Since then, Agco has bought several other small farm-equipment businesses, topped off by the $95 million acquisition of Massey Ferguson's North American tractor distribution operations in January. Now that the dealmaking is done, Robinson, 59, is cashing in some of his chips. His firm is selling more than half its 28% stake to the public in an offering of 1.5 million shares that is scheduled to be completed in early September. And Robinson is giving up his post as chairman, to be replaced by president Robert J. Ratliff, 61, who has been with Agco since 1988. Because of the offering, it's hard to get information on Agco. The underwriters are prohibited from commenting while the offering is under way, and few other analysts follow the company. But here's the basic outlook, according to fund managers and other informed sources we interviewed. As a maker of smaller, competitively priced farm equipment, Agco has been able to pick up market share by ''flying below Deere's radar,'' according to one analyst. As a result, forecasters project that Agco's earnings will rise to nearly $2 a share this year, up from 81 cents in '92. (Those results are fully adjusted for tax-loss carry-forwards and other factors.) For 1994, adjusted profits could run anywhere from $2.20 to $2.60 a share. Currently trading at $16.75, or only 8.4 times '93 earnings, Agco looks cheap compared with Deere at 15 times '94 profits. ''There's no reason for Agco to sell at such a big discount,'' says Albert Ruback, portfolio manager of Fidelity's Select Industrial Equipment Fund in Boston. He and other analysts think the stock could rise at least 30% to the low $20s within 18 months. American Water Works (AWK; New York Stock Exchange, $29.50). Anyone watching bedraggled flood victims lining up for American Water Works' trucked-in water can understand how vital the $657 million company is for its nearly 5 million customers. Three of the company's water systems were affected by the flood. ''Our St. Joseph, Mo. plant was sandbagged in shoulder-high water,'' says company spokesman Ward Welsh. But as the nation's largest publicly traded water utility with business diversified among 20 states, American Water will feel no long-term damage from the flood. Analyst Edward Tirello at NatWest Securities in New York City says it will knock only a nickel off the company's '93 earnings, which he projects at $2.25 a share this year. Moreover, the flood could accelerate American Water Works' expansion plans by encouraging small municipal and private water utilities to turn their operations over to the company rather than face the burden of repairing them. Jim Krekeler, analyst at Edward D. Jones in St. Louis, explains that the Safe Drinking Water Act Amendment of 1986, which requires stringent standards for water quality, will also enable American Water Works to buy smaller competitors elsewhere. ''Half of the 60,000 water systems across the country ) have fewer than 500 customers -- and don't have the resources for expensive filtration systems,'' says Krekeler. He projects that the company's profits could reach $2.45 a share next year; based on that projection, the stock is trading at 12 times earnings. Since American Water pays out only 50% of its profits as dividends -- a relatively low percentage for a utility -- Krekeler forecasts dividend increases of 7% to 8% annually over the next five years. Combined with its current 3.5% yield, the stock would offer an 11% annual return, or 16.5% over the next 18 months.

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