14 Best Agriculture Stocks to Buy Now

Published on November 25, 2022 at 9:50 am by Swati Goyal in Hedge Funds, News

In this article, we will be looking at the 14 best agriculture stocks to buy now. If you want to skip our detailed analysis of the agriculture sector, you can go directly to see the 5 Best Agriculture Stocks to Buy Now.

The Organization for Economic Co-operation and Development forecasts a 15% increase in global demand for agricultural output over the next ten years, which will be met by improved agricultural methods used by producers everywhere. The agricultural sector significantly impacts several regional, national, and international economic sectors. It accounts for 4% of the global GDP and more than 25% of GDP in developing countries. Understanding what is happening in this sector and how it will impact food production and distribution is crucial for everyone, from farmers and real estate investors to supermarkets and dining establishments.

After Russia’s invasion of Ukraine, several significant uncertainties make it hard to forecast the future prognosis for any business precisely. Because of the close ties between the energy and fertilizer sectors, this might have an impact on global agriculture suppliers. Russian exports of potash, ammonia, urea and other organic fertilizers have been significantly hampered due to Western sanctions on the country. Farmers worldwide are using less fertilizer and growing fewer crops due to the exorbitant fertilizer expenses.

As of November 15, 2022, the world’s population reached 8 billion, three times that in 1950. There will be 8.5 billion people on the planet by 2030, 9.7 billion by 2050, and 10.4 billion by the end of the century. Therefore, to fulfil the increasing food demand in 2050, global agriculture production must grow by about 50% from the present levels. The challenge for farmers, governments, and scientists is to increase food production without accelerating environmental deterioration and the climatic problem. AI-powered solutions that improve crop quality, quantity, and market entry time can help farmers become more productive.

Photo by Sebastian Gómez on Unsplash

Precision agriculture, often known as artificial intelligence systems, is assisting in enhancing the overall quality and accuracy of harvests. The potential that artificial intelligence (AI) offers for the interpretation of satellite imagery for field surveillance is one of the most effective uses of AI in agriculture. This technology makes the identification of pests, plant diseases, and undernutrition of farms easier. Prior to choosing which herbicide should be used in the region, artificial intelligence (AI) sensors may recognize and target weeds. Herbicide use is reduced, as a result, lowering expenses. Furthermore, employing AI-based robots for agricultural harvesting aids in managing the labor shortage. AI also makes smart decisions, such as optimal plant time, crop yields, and forecasting prices. Robots have been created by businesses like Harvest Automation and Nexus Robotics for picking fragile food and pulling weeds, respectively. These trends, combined or used in any combination, will impact every aspect of the agriculture industry. The global AI in agriculture market was worth USD 1.1 billion in 2021 and is expected to increase at a CAGR of 25.1% to reach USD 4.2 billion by 2028.

Agribusiness is currently in high demand. Due to the size required for operations, a few industry giants like Deere & Company (NYSE:DE), Archer-Daniels-Midland Company (NYSE:ADM), and Corteva, Inc. (NYSE:CTVA) control the bulk of the market share. As a result, these agricultural equities are in the limelight and appear poised for long-term success.

Our Methodology

In order to identify the best agriculture stocks to buy now, we first started with the 189 positions in iShares MSCI Global Agriculture Producers ETF (VEGI). VEGI invests in global agriculture stocks that have exposure to “companies that produce fertilizers and agricultural chemicals, farm machinery, and packaged foods, and meats”. We then used Insider Monkey’s proprietary database of hedge fund sentiment scores to rank these stocks based on their popularity among the 920 hedge funds that recently reported their 13F portfolios.

Best Agriculture Stocks to Buy Now

14. Cal-Maine Foods, Inc. (NASDAQ:CALM)

Number of Hedge Fund Holders: 27

Cal-Maine Foods, Inc. (NASDAQ:CALM) manufactures and distributes shell eggs. Its primary market is the United States. The company’s brands include Egg- Land’s, Land O’ Lakes, Farmhouse, and 4-Grain.

On September 28, BofA analyst Peter Galbo reduced his price objective on Cal-Maine Foods, Inc. (NASDAQ:CALM) to $50 from $55 and retained an ‘Underperform’ rating on the stock.

Among the hedge funds tracked by Insider Monkey, 27 funds reported owning stakes in Cal-Maine Foods, Inc. (NASDAQ:CALM) at the end of Q3 2022, compared to 22 funds in the last quarter. Ric Dillon’s Diamond Hill Capital is the largest stakeholder of Cal-Maine Foods, Inc. (NASDAQ:CALM), with 1.65 million shares worth $91.52 million.

Cal-Maine Foods, Inc. (NASDAQ:CALM) is one of the most essential agricultural stocks alongside Deere & Company (NYSE:DE), Archer-Daniels-Midland Company (NYSE:ADM), and Corteva, Inc. (NYSE:CTVA).

In its Q3 2022 investment letter, Diamond Hill Capital mentioned Cal-Maine Foods, Inc. (NASDAQ:CALM). Here is what the fund:

“On an individual holdings’ basis, top contributors to return in Q3 included Cal-Maine Foods, Inc. (NASDAQ:CALM) and WESCO International. Tight hen supply tied to a bird flu outbreak has supported higher egg prices, a key driver for egg-producer Cal-Maine’s profitability. Outside of that exogenous event, Cal-Maine is well positioned amid an industry shift to cage-free eggs. Cal-Maine invested ahead of competitors in upgrading facilities — spending on its upgrades when inflation was lower — which we believe should prove an additional boon enabling ongoing share gains.”

13. Ingredion Incorporated (NYSE:INGR)

Number of Hedge Fund Holders: 27

Ingredion Incorporated (NYSE:INGR) manufactures ingredients for the food, paper, beverage, and personal-care industries. Starches make up around 45% of sales, sweeteners about 35%, and co-products make up the remaining 20%. As of September 30, 2022, Yacktman Asset Management is the most prominent shareholder in Ingredion Incorporated (NYSE:INGR), having stakes of more than $189.45 million.

On November 7, Credit Suisse analyst Robert Moskow reaffirmed a ‘Neutral’ rating on the shares of Ingredion Incorporated (NYSE:INGR) and raised his price objective from $94 to $100. After a successful Q3, increased gross margins, and an improvement in operating income, the analyst highlighted that management had increased EPS projections.

As of the close of Q3 2022, 27 hedge funds tracked by Insider Monkey owned stakes in Ingredion Incorporated (NYSE:INGR), up from 22 in the preceding quarter. These stakes are collectively valued at over $421.25 million.

12. FMC Corporation (NYSE:FMC)

Number of Hedge Fund Holders: 28

FMC Corporation (NYSE:FMC) is a firm that specializes in agricultural sciences. Through a product range backed by a pipeline of market-driven research and development in crop protection, crop improvement, and expert pest and turf management, it offers growers solutions. FMC Corporation (NYSE:FMC) stands twelfth on the list of 14 best agriculture stocks to buy now.

Christopher Kapsch, an analyst at Loop Capital, raised FMC Corporation (NYSE:FMC) from ‘Hold’ to ‘Buy’ on November 15 and increased his price objective from $132 to $149. When considering the ability to close a value gap relative to Corteva, Inc. (NYSE:CTVA), Kapsch anticipated a larger upside for FMC Corporation (NYSE:FMC) shares.

Ken Griffin’s Citadel Investment Group is FMC Corporation (NYSE:FMC)’s largest investor through a $130.17 million stake. As of Q3 2022, 28 hedge funds have positions in FMC Corporation (NYSE:FMC), compared to 29 in the previous quarter.

Aristotle Capital Management mentioned FMC Corporation (NYSE:FMC) in its Q1 2022 investor letter. Here is what the firm has to say:

“FMC is an agricultural sciences company providing solutions for the protection of crops from different pests. Its products are used by farmers to ensure bugs, weeds and fungi do not negatively impact their harvest. Headquartered in Philadelphia, Pennsylvania, the company has a rich history dating back to 1883 when inventor John Bean set out to build a better insecticide spray pump. Over the decades, through acquisitions, FMC became a disparate collection of chemical companies. FMC has transformed itself to solely focus on crop chemicals, having acquired DuPont’s crop chemicals portfolio in 2017, and completed the separation of its lithium business in 2019. FMC is now one of the largest patented crop protection companies globally.…” (Click here to see the full text)

11. CNH Industrial N.V. (NYSE:CNHI)

Number of Hedge Fund Holders: 28

CNH Industrial N.V. (NYSE:CNHI) is an industrial equipment and service provider. The company creates, produces, promotes, offers for sale, and finances construction and agricultural equipment. CNH Industrial N.V. (NYSE:CNHI) currently has a significant presence in roughly 180 countries.

On November 9, Oppenheimer analyst Kristen Owen raised CNH Industrial N.V. (NYSE:CNHI) to ‘Outperform’ from ‘Perform’ with a $18 price objective following another fantastic quarterly result.

At the end of Q3 2022, CNH Industrial N.V. (NYSE:CNHI) was a part of 28 hedge fund portfolios, growing from 25 a quarter earlier, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $755.07 million. Of the 28 hedge funds that were bullish on CNH Industrial N.V. (NYSE:CNHI), Harris Associates is the leading stakeholder of the company, holding 97.86 million shares worth $1.12 billion.

Oakmark Funds mentioned CNH Industrial N.V. (NYSE:CNHI) in its Q2 2022 investor letter. Here is what the firm has to say:

“We sold our position in Iveco Group (Italy), in favor of names that, in our opinion, offer a more favorable risk/return profile. Iveco Group’s arrival in the Fund stemmed from CNH Industrial N.V. (NYSE:CNHI)’s demerger of its trucks and commercial vehicles business in early January. We continue to hold CNH Industrial as we believe it holds an attractive valuation at its current price.”

10. The Scotts Miracle-Gro Company (NYSE:SMG)

Number of Hedge Fund Holders: 29

The Scotts Miracle-Gro Company (NYSE:SMG) manufactures, markets, and distributes hydroponic gardening systems and accessories. It operates in three segments: US Consumer, Hawthorne, and Other. First Eagle Investment Management is one of the largest shareholders in The Scotts Miracle-Gro Company (NYSE:SMG) owning over 1.58 million shares of the stock, valued at roughly $67.34 million.

As of the close of Q3 2022, 29 hedge funds tracked by Insider Monkey owned stakes in The Scotts Miracle-Gro Company (NYSE:SMG), up from 25 in the preceding quarter. These stakes are collectively valued at over $128.33 million.

The Scotts Miracle-Gro Company (NYSE:SMG) was raised by Barclays analyst Gaurav Jain on November 8 from ‘Equal Weight’ to ‘Overweight’ with a $75 price target. The analyst justified the upgrade by pointing to the stock’s 16% free cash flow yield.

9. Darling Ingredients Inc. (NYSE:DAR)

Number of Hedge Fund Holders: 35

Darling Ingredients Inc. (NYSE:DAR) develops, manufactures, and markets natural products generated from edible and inedible bio-nutrients. Darling Ingredients Inc. (NYSE:DAR), a sustainability leader, runs more than 270 facilities across 17 nations and recycles about 15% of the waste streams from the meat industry into high-value products.

Dushyant Ailani, an analyst at Jefferies, initiated coverage of Darling Ingredients Inc. (NYSE:DAR) on October 19, assigning it a ‘Buy’ rating with a $102 price objective.

According to Insider Monkey’s Q3 data, 35 hedge funds were bullish on Darling Ingredients Inc. (NYSE:DAR), compared to 33 funds in the last quarter. Ian Simm’s Impax Asset Management held the largest stake in Darling Ingredients Inc. (NYSE:DAR), comprising nearly 3.65 million shares worth $240.85 million.

Here is what Aristotle Capital Management has to say about Darling Ingredients Inc. (NYSE:DAR) in its Q1 2022 investor letter:

“Darling posted a strong recovery in the first quarter, rising on higher Diesel prices and strong demand for proteins and feedstocks. Furthermore, the Company continues to expand production in its Diamond Green Diesel (DGD) joint venture with Valero. Cash flows are expected to grow meaningfully next year, as the DGD 3 plant is expected to come online in Port Arthur Texas in the first half of 2023, bringing DGD total renewable diesel production capacity up to 1.2 billion gallons per year.”

8. Archer-Daniels-Midland Company (NYSE:ADM)

Number of Hedge Fund Holders: 37

Archer-Daniels-Midland Company (NYSE:ADM) is a producer and processor of agricultural products. In addition, the company provides long-term human and animal nourishment. Archer-Daniels-Midland Company (NYSE:ADM) has a forward P/E of 12.7x, below the industry average of 20.1x.

According to Insider Monkey’s data, 37 hedge funds were bullish on Archer-Daniels-Midland Company (NYSE:ADM) at the end of September 2022, compared to 42 funds in the prior quarter. Tom Gayner’s Markel Gayner Asset Management held the most notable stake in Archer-Daniels-Midland Company (NYSE:ADM), comprising 1.46 million shares worth $117.72 million.

On October 26, Baird analyst Ben Kallo maintained an ‘Outperform’ rating and increased his price objective on Archer-Daniels-Midland Company (NYSE:ADM) to $98 from $94. The analyst stated that despite the firm navigating a complex supply chain and currency rate environment, fundamental demand was still solid.

Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm had to say:

“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”

7. Lamb Weston Holdings, Inc. (NYSE:LW)

Number of Hedge Fund Holders: 42

Lamb Weston Holdings, Inc. (NYSE:LW) manufactures, distributes, and markets value-added frozen potatoes, vegetable products, sweet potatoes, and appetizers to restaurants and retailers globally. Lamb Weston Holdings, Inc. (NYSE:LW) has a $12.4 billion market capitalization. It delivered a 50.90% return in the past twelve months as of November 23.

On October 6, JPMorgan analyst Thomas Palmer maintained an ‘Overweight’ rating on Lamb Weston Holdings, Inc. (NYSE:LW) and increased his price objective to $101 from $98. Palmer wrote in a research note that the firm had another minimal maintenance quarter and that its recovery of profitability was in progress.

At the end of the September quarter, 42 hedge funds in Insider Monkey’s database owned stakes in Lamb Weston Holdings, Inc. (NYSE:LW), up from 35 in the previous quarter. These stakes have a total value of over $1.54 billion.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Anomaly Capital Management is a leading shareholder in Lamb Weston Holdings, Inc. (NYSE:LW), with 2.72 million shares worth more than $210.28 million.

Carillon Tower Advisers mentioned Lamb Weston Holdings, Inc. (NYSE:LW) in its Q3 2022 investor letter. Here is what the firm has to say:

“Lamb Weston Holdings, Inc. (NYSE:LW) supplies frozen potato products globally to the restaurant and food retail industries. Just as demand began to recover from pandemic shutdowns last year, an unusually small potato harvest exacerbated an inflationary cost environment. Pricing actions have been effective in recent quarters, driving margin recovery and boosting earnings.”

6. The Mosaic Company (NYSE:MOS)

Number of Hedge Fund Holders: 46

The Mosaic Company (NYSE:MOS) manufactures and sells concentrated phosphate and potash agricultural fertilizers. The business produced 2.3 million tonnes of potash overall in the third quarter of 2022, up from 1.6 million tonnes in the same quarter the previous year. The firm conducts its operations through completely and majority-owned affiliates. However, the company’s stock has declined 18.07% over the past six months.

On November 22, Piper Sandler analyst Charles Neivert maintained an ‘Overweight’ rating on The Mosaic Company (NYSE:MOS) and lowered his price objective from $75 to $65 following the Q3 results. The analyst predicted a considerable, but expected, drop in 2023 earnings compared to 2022, partly due to the slowing down of a boom in demand for potash and phosphates in the fourth quarter and 2023.

As of the close of Q3 2022, 46 hedge funds in Insider Monkey’s database owned stakes in Mosaic Company (NYSE:MOS), holding a total value of over $912.96 million. The most significant stakeholder of The Mosaic Company (NYSE:MOS) is Soroban Capital Partners, with 6.87 million shares, worth $332.20 million.

Along with Deere & Company (NYSE:DE), Archer-Daniels-Midland Company (NYSE:ADM), and Corteva, Inc. (NYSE:CTVA), The Mosaic Company (NYSE:MOS) is one of the best agriculture stocks to buy.

Click to continue reading and see 5 Best Agriculture Stocks to Buy Now.

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Published on May 1, 2024 at by Inan Dogan, PhD

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