The human population was estimated to be nearly 7 billion in 2011 by The World Bank. Last year, the U.S. Census Bureau estimated the number to be slightly higher than that. The world’s population keeps growing, and emerging economies continue to develop. As a result, commodity prices have risen in recent years and are likely to keep rising over time. With that in mind, the following companies have business models poised to profit from the reality of scarce resources.
Monsanto Company (NYSE:MON) is the $55 billion agricultural giant that provides products for farmers worldwide. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. Last October, the company reported its full-year financial results, which were very good.
Total revenues rose more than 14% year over year, and earnings per share climbed more than 28% versus the prior year. Since 2008, Monsanto achieved four-year compound annual growth in sales of 4.4%.
Furthermore, the company got off to a great start in fiscal 2013, reporting first-quarter sales growth of more than 20%. Monsanto’s stock has been on fire recently, rising more than 30% in 2012 and has increased more than 6% to begin 2013.
Archer Daniels Midland Company (NYSE:ADM) carries a $20 billion market capitalization and manufactures and sells protein meal, vegetable oil, corn sweeteners, flour, biodiesel, and ethanol. In early February, the company reported 2012 second-quarter earnings per share of $0.60, up 18% from the previous year. In addition, the company provided investors with a 9% dividend increase.
Archer Daniels Midland has an impressive dividend track record, having paid dividends for 325 consecutive quarters. The company has raised its dividend every year since 2002. At current prices, the stock looks to be attractive for both value and dividend investors, with a trailing price-to-earnings ratio of less than 15 and a 2.5% yield.
Deere & Company (NYSE:DE) manufactures and distributes agriculture and turf equipment, and construction and forestry equipment, worldwide, commanding a $36 billion market value.
Deere is certainly not an expensive stock, with trailing and forward P/Es of 12 and 10, respectively. In addition, the stock trades for a price-to-earnings growth ratio of 1.13, indicating that the company is priced conservatively in relation to its future growth expectations.
In December, Deere provided investors its annual results, reporting sales and earnings per share growth of 13% and 15%, respectively. In addition, in 2012 Deere raised its dividend by more than 12% and should raise its dividend in time for its next payout.
American States Water Co (NYSE:AWR) provides the most scarce resource of all: water. The company purchases and distributes water in California.
The company is the gold standard for dividend-raisers. American States Water Company has increased its dividend every year since 1955, a streak amounting to 58 consecutive years. Its last dividend raise was an impressive 27% in 2012.