In this article, we discuss 10 GMO stocks to invest in now.
A genetically modified organism (GMO) is developed by utilizing genetic engineering techniques that modify an organism’s genetic structure, with genes that can be crossed among different species or transferred among the same class of species.
Why are GMOs Necessary in Agriculture?
Genetic modification is an increasingly common practice in the agriculture industry, where seeds, strains, crops, and soils can be transformed genetically to replicate the traits of an organism that displays potentially useful characteristics, such as endurance to harsh weather, tolerance to herbicides, and resistance to plant viruses and insect damage. This results in a healthier, stronger yield, adds nutritional value, and allows for sustainable farming.
The U.S. Food and Drug Administration (FDA) regulates the GMO foods market, ensuring that GMO ingredients meet the strict safety standards that are set for them. Japanese journalist Masami Kojima was an extremely vocal critic of genetically modified and engineered food products. However, amid the Russian invasion of Ukraine, it has become exceedingly clear that to close the gap in global food shortages, biotechnology must be used for quicker crop harvests. Kojima also noted that Japan’s annual food imports consist of 10 million tons of genetically modified corn.
GMOs allow small farmers to realize their full potential and partake in sustainable agricultural practices. The amount of land fit for cultivation will continue to decrease as global population increases and urbanization leads to loss of agricultural lands in favor of architecture and buildings. This means that the limited arable land must be able to produce higher yields on a sustainable basis.
Similarly, access to sufficient food is a global political and societal challenge in order to eradicate world hunger and allow for fair distribution of sustenance. GMOs assist with utilizing limited land repeatedly yet sustainably and managing food wastage to promote food security worldwide.
Growth of the GMO Crops Market
The global market for GMO crops reached a valuation of approximately $24.6 billion in 2017. This segment of the global agriculture industry is anticipated to grow to $46.9 billion by 2025, with a CAGR of 8.41% over the forecast period of 2018-2025. The factors that will allow the market such rapid growth include the need for higher agricultural productivity, increasing demand for food, and growing investment and interest in biotechnology and food innovation.
In the United States, GMO soybeans made up 94% of the entire harvest in 2018, GMO cotton made up 94% of all cotton sown, and 92% of the corn yield was genetically modified corn. Additionally, GMO crops also include potatoes, papaya, squash, canola, alfalfa, apples, and sugar beet. Over 95% of the animals used for meat and dairy in the United States also feed on GMO crops.
In the war backdrop, genetically modified crops can realistically provide a safe haven from a global food crisis. This is why it is advised to look out for GMO stocks to invest in now, since the market could explode in 2022 and beyond. Investors could seek out GMO players, in addition to holding some of the most notable agriculture names such as The Mosaic Company (NYSE:MOS), Archer-Daniels-Midland Company (NYSE:ADM), and Bunge Limited (NYSE:BG), among others discussed in detail ahead.
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Our Methodology
After an extensive assessment of the GMO industry, we picked the companies and exchange traded funds that have interests vested in genetically modified organisms and genetic food engineering. We ensured that the companies received positive analyst ratings recently, in addition to displaying strong business fundamentals.
Data from 900+ elite hedge funds tracked by Insider Monkey at the end of December 2021 was used to identify the number of hedge funds that hold stakes in each firm. The companies have been ranked according to the hedge fund sentiment that surrounds them.
GMO Stocks to Invest in Now
10. Bayer Aktiengesellschaft (OTC:BAYRY)
Number of Hedge Fund Holders: 1
Bayer Aktiengesellschaft (OTC:BAYRY) is a German multinational pharmaceutical and life sciences company that is positioned as one of the biggest GMO players in the market. The company acquired Monsanto, the American agrochemical and biotechnology firm, in May 2016 for $66 billion. Bayer CropScience division specializes in the genetic engineering of food, and provides genetically modified rice and grains.
On March 1, Bayer Aktiengesellschaft (OTC:BAYRY) announced fourth quarter net profit of €1.16 billion, up from €308 million in the prior-year quarter. The net profit also topped analysts’ forecasts of €731 million. Bayer Aktiengesellschaft (OTC:BAYRY) also guided for higher earnings and sales in 2022. For 2022, the company expects total sales of approximately €46 billion, and core earnings per share of roughly €7.00. The dividend will be maintained at €2.00.
Barclays analyst Emily Field raised the price target on Bayer Aktiengesellschaft (OTC:BAYRY) to €60 from €55 and reiterated an Equal Weight rating on the shares. The fourth quarter database of Insider Monkey reported that Frederick Disanto’s Ancora Advisors owned a $9,000 stake in Bayer Aktiengesellschaft (OTC:BAYRY).
In addition to The Mosaic Company (NYSE:MOS), Archer-Daniels-Midland Company (NYSE:ADM), and Bunge Limited (NYSE:BG), Bayer Aktiengesellschaft (OTC:BAYRY) is a notable agriculture play in this market.
9. Origin Agritech Limited (NASDAQ:SEED)
Number of Hedge Fund Holders: 1
Origin Agritech Limited (NASDAQ:SEED) is a Chinese company that supplies rice, corn seed, and canola seed, among others. The company engages in agricultural biotechnology, using local germplasm with a long breeding history to enhance seeds. Origin Agritech Limited (NASDAQ:SEED)’s GMO corn seeds have cleared five stages of the GM approval process and received the Bio-Safety Certificate.
On February 7, Origin Agritech Limited (NASDAQ:SEED) reported that it forecasts revenues to increase more than 300% to more than 150 million RMB, and expects to turn a profit for fiscal 2022. Origin Agritech Limited (NASDAQ:SEED) is presently in discussions for partnerships with other feedstock suppliers to create enhanced crops for its customers. Origin Agritech Limited (NASDAQ:SEED) plans to achieve this feat by leveraging its GMO and CRISPR technologies.
The stock has gained approximately 41% over the last month amid the Russian war backdrop as global food shortages appear to be on the horizon. At the end of December 2021, Paul Marshall and Ian Wace’s Marshall Wace LLP reported owning 6,890 shares of Origin Agritech Limited (NASDAQ:SEED), worth $49,000.
8. BASF SE (OTC:BASFY)
Number of Hedge Fund Holders: 1
BASF SE (OTC:BASFY) is the largest chemical producer, headquartered in Ludwigshafen, Germany. The company has acquired several gene editing tools to improve plant nutrition and quality. BASF SE (OTC:BASFY)’s plant science division has developed Amflora, a genetically modified starch potato, which is commercially available in the United States and the United Kingdom.
For 2021, BASF SE (OTC:BASFY) reported a full-year revenue of $78.5 billion, compared to $59.1 billion in the prior year. The net income in 2021 came in at $5.5 billion, a solid overturn from the loss of more than $1 billion in 2020.
According to the fourth quarter database of Insider Monkey, Ancora Advisors reported owning 4,000 shares of BASF SE (OTC:BASFY), worth $70,000. On March 3, JPMorgan analyst Chetan Udeshi reiterated an Overweight rating on BASF SE (OTC:BASFY), but lowered the price target to €74 from €76.50.
7. Yield10 Bioscience, Inc. (NASDAQ:YTEN)
Number of Hedge Fund Holders: 3
Yield10 Bioscience, Inc. (NASDAQ:YTEN) is an American company that develops advanced technologies that increase crop yield and promote plant protection. The company leverages its differentiated trait gene discovery platform to enhance the genetic traits for the agriculture and food industries.
On March 10, Maxim analyst Anthony Vendetti maintained a Buy rating on Yield10 Bioscience, Inc. (NASDAQ:YTEN), but reduced the price target to $9 from $18 amid industry-wide valuation contraction. The analyst noted that Yield10 Bioscience, Inc. (NASDAQ:YTEN)’s Q4 financial results exceeded expectations, with operating expenditure lower than market consensus.
The stock has climbed more than 21% in the last month, amid the Russia/Ukraine war and the global food crisis. According to the fourth quarter database of Insider Monkey, 3 hedge funds placed long bets on Yield10 Bioscience, Inc. (NASDAQ:YTEN), with collective stakes exceeding $2 million.
6. Calyxt, Inc. (NASDAQ:CLXT)
Number of Hedge Fund Holders: 6
Calyxt, Inc. (NASDAQ:CLXT) is a synthetic biology company based in Roseville, Minnesota. The company experiments with natural product chemistries, metabolomics, genomics, and gene expression tools to identify and develop new plant-derived compounds. The stock has gained over 10% in the last month, and the Q4 revenue of $12.20 million beat Street expectations by $9.56 million.
On March 4, Canaccord analyst Bobby Burleson reiterated a Buy recommendation on Calyxt, Inc. (NASDAQ:CLXT), while lowering the price target to $4.00 from $6.00. The analyst reduced his price objective to account for potential volatile fundamentals from Calyxt, Inc. (NASDAQ:CLXT)’s new revenue source – SynBio, where profitability and customer sentiment is yet to be determined.
Among the hedge funds tracked by Insider Monkey, 6 funds reported owning stakes in Calyxt, Inc. (NASDAQ:CLXT), holding stakes worth $1.80 million, compared to 5 funds in the prior quarter, with stakes in Calyxt, Inc. (NASDAQ:CLXT) valued at $1.76 million. John Overdeck and David Siegel’s Two Sigma Advisors is the largest shareholder of the company, with 393,100 shares worth $837,000.
Elite hedge funds are beginning to pour into Calyxt, Inc. (NASDAQ:CLXT), just like The Mosaic Company (NYSE:MOS), Archer-Daniels-Midland Company (NYSE:ADM), and Bunge Limited (NYSE:BG).
5. First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG)
Number of Hedge Fund Holders: N/A
First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG) is an exchange traded fund that has a portfolio consisting of the largest agriculture companies that are involved in enhancing agricultural yields. The companies specialize in agricultural technology, chemicals, fertilizers, seeds, irrigation equipment, and farm machinery.
The most notable holdings in First Trust Indxx Global Agriculture ETF (NASDAQ:FTAG)’s portfolio include Bayer Aktiengesellschaft (OTC:BAYRY), Corteva, Inc. (NYSE:CTVA), and BASF SE (OTC:BASFY), the leading GMO market players, among other prominent names in the sector. As of March 25, the fund’s total net assets equal $16.70 million.
4. Global X AgTech & Food Innovation ETF (NASDAQ:KROP)
Number of Hedge Fund Holders: N/A
Global X AgTech & Food Innovation ETF (NASDAQ:KROP) is an exchange traded fund that is focused on high growth agriculture companies specializing in agricultural technology and food security. The fund incepted in 2021, and current net assets amount to $6.43 million.
Global X AgTech & Food Innovation ETF (NASDAQ:KROP) invests in some of the top companies that deal in genetically modified crops, such as Bayer Aktiengesellschaft (OTC:BAYRY) and Corteva, Inc. (NYSE:CTVA), allowing investors sufficient exposure to GMO stocks.
3. AquaBounty Technologies, Inc. (NASDAQ:AQB)
Number of Hedge Fund Holders: 9
AquaBounty Technologies, Inc. (NASDAQ:AQB) is a Massachusetts-based biotechnology company that seeks to improve productivity in the commercial aquaculture industry across the United States and Canada. The company specializes in genetic, genomic, and fish nutrition activities.
AquaBounty Technologies, Inc. (NASDAQ:AQB) reported harvesting 91 tons of salmon in Q4 2021, an 8% improvement over the third quarter. To fulfill the rising market demand for its genetically engineered salmon, the company is starting construction of a next-generation 10,000 metric ton farm in Pioneer, Ohio. The farming facility will become operational in late 2023.
According to the fourth quarter database of Insider Monkey, 9 hedge funds were bullish on AquaBounty Technologies, Inc. (NASDAQ:AQB), up from 6 funds in the last quarter. Cathie Wood’s ARK Investment Management is the biggest shareholder of AquaBounty Technologies, Inc. (NASDAQ:AQB), with 5.3 million shares worth more than $11 million.
2. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA)
Number of Hedge Fund Holders: 30
Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) is a Massachusetts-based company involved in cell programming, genetic engineering, and organism engineering. The company aims to improve the efficiency and sustainability of existing strains, in order to revolutionize agriculture and food ingredients.
On March 14, Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) announced its plans to acquire FGen AG, a Swiss bioengineering company, that provides a screening platform built on nanoliter reactor technology. The acquisition will enable Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) to expand into the genetic technology market, raising the possibility of discovering enzymes, pathways, and strains to create diverse products.
Cowen analyst Steven Mah initiated coverage of Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) on March 2 with an Outperform rating and a $12 price target. Synthetic Biology, or “SynBio” is a high-growth vertical and Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) has a prominent competitive advantage in scalable genetic engineering, the analyst told investors in a bullish thesis.
Among the hedge funds tracked by Insider Monkey, 30 funds were bullish on Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) at the end of December 2021, compared to 32 funds in the earlier quarter. The total stakes held in Q4 amounted to $4.2 billion.
1. Corteva, Inc. (NYSE:CTVA)
Number of Hedge Fund Holders: 42
Corteva, Inc. (NYSE:CTVA) is an Indiana-based agribusiness that uses germplasm to optimize crop yield. In late 2021, Corteva, Inc. (NYSE:CTVA) launched new genetically modified soy seeds in Brazil, where the company seeks to break Bayer Aktiengesellschaft (OTC:BAYRY)’s monopoly.
On March 22, Citi analyst P.J. Juvekar lifted the price target on Corteva, Inc. (NYSE:CTVA) to $66 from $59 and maintained a Buy rating on the shares. The Russia-Ukraine conflict has caused fertilizer prices to spike on supply concerns in already tight markets, and Corteva, Inc. (NYSE:CTVA) is clearly positioned to benefit, the analyst told investors in a research note.
Corteva, Inc. (NYSE:CTVA) is one of the top GMO stocks on Wall Street. In the fourth quarter of 2021, 42 hedge funds were bullish on Corteva, Inc. (NYSE:CTVA), compared to 41 funds in the prior quarter. Jeffrey Smith’s Starboard Value LP is the biggest shareholder of the company, with 8.90 million shares worth close to $421 million.
Here is what Rhizome Partners had to say about Corteva, Inc. (NYSE:CTVA) in its Q1 2021 investor letter:
“We are still getting used to the higher multiples that investors will pay for larger market cap and pure play companies such as Corteva. We do understand the market’s rationale. For example, Corteva operates in a duopoly with Monsanto, owned by Bayer AG, that provides genetically modified seeds and pesticides. With some operating leverage, the company can probably grow FCF at 4-6% a year. This brings the total return close to the long-term return of the S&P 500 index of 10%. Through trial and error, we have come to appreciate how scale, higher market share, route densities, switching costs, and collaborative relationships amongst major industry players can contribute to sustained high returns on invested capital.”
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Disclosure: None. 10 GMO Stocks to Invest in Now is originally published on Insider Monkey.
