Farming is hot, or at least it is when it comes to hedge fund investment. Big names like George Soros and Warren Buffett love this sector because, hey, people have to eat, right? And, especially now, as more people embrace fresh produce and food with minimal processing, agriculture and the stocks associated with it are rapidly becoming an investment trend. The stocks on our list vary in market cap from $350M to over $4B, but they are all in the agricultural chemicals industry and have trading volumes over one million.
Rentech Inc (RTK) is one of the stocks investors are going crazy for. Its trading volume is over 1.8 million. It is the smallest of the companies we looked at, but don’t discount the little guy. The company recently raised over $136 million from the initial public offering of Rentech Nitrogen Partners (RNF), a subsidiary. RTK owns just over 50% of the company. Given that RTK’s market cap is $355 million, raising that much was a really big deal. From January 1 to November 11, RTK has returned 24.41%. It is currently trading at $1.58. Analysts have given the stock a one year target estimate of $1.88. Current estimates put its year over year sales will increase by 33.90% in the current year and taper down to 7.30% next year. Blackrock, Inc (BLK) owns 7.42% of the company according to a 13G/A document filed with the SEC on November 8, 2011. At the end of the second quarter, Clint Coghill’s Coghill Capital Management has more than 2% of its portfolio invested in the company.
Monsanto Co. (MON) is also a stock to watch. It has a trading volume over 3.3 million. It is also the world’s largest seed company. It has a market cap of $40.16B. Right now, it is working on genetically modified soybeans that resist insects and selling them for big dollars in developing countries. MON recently tapped more than half of the growers in Argentina – a 40-million acre opportunity. In fact, roughly 60% of its gross profit for fiscal year 2012 is forecasted to come from outside the US. ts philosophy is simple – “Farmers want innovation and farmers are willing to pay for innovation if there is a system in place that allows that to happen fairly,” explains Chief Commercial Officer Brett Begemann. MON recently traded at $75.10 and has a one year target estimate of $81.12. It has a year over year revenue growth estimate of 7.60% for the current year, which ends August 2012 by its records, and 7.10% for its next fiscal year. Its year to date return as of November 11 is 10.87%. Stephen Mandel’s Lone Pine Capital had more than $368 million in the company at the end of the second quarter, a position worth over 2.7% of its total portfolio.
Potash Corp of Saskatchewan (POT) is a $40.13B market cap company and is the most popular of the stocks we looked at. It has a trading volume of almost 5.3 million. It recently declared a quarterly dividend of US $0.07 per share payable February 9, 2012 to shareholders of record January 19, 2012. It also recently reported third-quarter earnings of $0.94 per share ($826 million), more than double the $0.38 per share ($343 million) earned in the same quarter last year. Its year over year sales growth estimate is 32.80% for this year and 13.90% for 2012. Andreas Halvorsen’s Viking Global had more than 2.5% of its portfolio invested in the company at the end of June, in a position worth more than $301 million. POT has fallen -9.43% since the first of the year (take November 11, 2011), but analyst estimates are strong. POT recently traded at $46.86 and has a one year estimate of $64.71.