In this article, we discuss the 5 best agriculture stocks to invest in. To read the detailed analysis of the agriculture sector, go directly to 10 Best Agriculture Stocks To Invest In.
5. Bunge Limited (NYSE:BG)
Number of Hedge Fund Holders (Q1): 55
Bunge Limited (NYSE:BG) is a Missouri-based agriculture company. The company also focuses on food processing, grain trading, and fertilizers. It operates in around 40 countries worldwide.
Due to the supply chain issues, Bunge Limited (NYSE:BG) benefited greatly from the high demand in the agriculture business. The revenue from refined and speciality oils came in at $214 million in Q2 2022, compared to $113 million in the same quarter in 2021. Milling revenue stood at $109 million, compared to $34 million a year ago in the same quarter as the company successfully managed the supply chain front. Even after missing the estimates in its Q2 2022 results, the company raised its full-year EPS guidance from $11.50 to $12.
As of August 10, Bunge Limited (NYSE:BG) has a dividend yield of 2.18% with an annual dividend of $2.5. The company increased its dividend to $0.625 for the quarter from the previous $0.525. The quarterly dividend will be paid out on September 2, to the shareholders on record as of August 19.
Here is what Old West Investment Management had to say about Bunge Limited (NYSE:BG) in its Q1 2022 investor letter:
“Bunge (pronounced BUN-GEE) Ltd (NYSE:BG) is one of the biggest agribusinesses and food companies in the world. There are four worldwide companies that dominate the sector, the others being Archer-Daniels-Midland Cargill, and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw the Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman actually write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.
Heckman was a long time executive at Conagra Foods who obviously sensed opportunity at BG. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…” (Click here to see the full text)
4. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders (Q1): 60
Nutrien Ltd. (NYSE:NTR) is a fertilizer company based in Canada. It is the world’s largest producer of potash and the third largest producer of nitrogen. In July, the company announced the acquisition of Brazilian retail fertilizer company Casa do Adubo to expand its operations to Latin America.
In the second quarter of 2022, Nutrien Ltd. (NYSE:NTR)’s net income increased threefold on a YoY basis to $3.6 billion or a GAAP-EPS of $6.51. The non-GAAP EPS was recorded at $5.85, outperforming the estimates by $0.15. The revenue of $14.51 billion recorded a 48.7% YoY growth but lagged behind the estimates by $220 million. The company had cash and cash equivalents of $711 million and the cash provided by operating activities was $2.558 billion for the quarter. Furthermore, the company lowered its long-term debt by 30% YoY to $7.056 billion.
On August 4, Nutrien Ltd. (NYSE:NTR) declared a quarterly dividend of $0.48 to be paid out by October 14 to the shareholders of record on September 30. As of August 10, the dividend yield of the company stood at 2.24%. In addition, Nutrien Ltd. (NYSE:NTR) also focused on shareholder returns throughout the year via buybacks. Between January 1 and August 2, the company repurchased shares worth $1.8 billion and plans to allocate $5 billion for repurchases in 2022.
On August 9, Scotiabank analyst Ben Isaacson upgraded Nutrien Ltd. (NYSE:NTR) to Outperform from Sector Perform and lowered his price target to $110 from $118.
3. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders (Q1): 66
The Mosaic Company (NYSE:MOS) is USA’s largest potash and phosphate fertilizer producer. As of August 9, the company stock is up by 34.39% on a YTD basis. Top names in the automotive industry such as Tesla, Inc. (NASDAQ:TSLA) and Ford Motor Company (NYSE:F) have opted for cobalt-free LFP batteries due to their environment-friendly nature and low cost. The Mosaic Company (NYSE:MOS) produces the phosphate necessary for the LFP batteries. Due to the huge incoming demand for LFP batteries, the global lithium iron phosphate battery is expected to grow at a CAGR of 24.6% between 2021 and 2028, making The Mosaic Company (NYSE:MOS) a safe long-term bet.
On August 3, Citi analyst P.J. Juvekar upgraded The Mosaic Company (NYSE:MOS)’s shares to Buy from Neutral and raised the price target to $61 from $57. According to the analyst, agriculture stocks are expected to outperform in the current slowing economic environment. The analyst believes that the Russian invasion of Ukraine has “upended” the agriculture and fertilizer market and will take quite a few years for the supply and demand to find a balance.
Here is what Carillon Tower Advisors had to say about The Mosaic Company (NYSE:MOS) in its Q1 2022 investor letter:
“Despite a rally near the end of the quarter, major equity indexes closed lower as fear of U.S. Federal Reserve (FED) balance sheet tapering, interest rate hikes, and war in the Ukraine sent the bulls into retreat. Supply chains eased for some goods, but remained challenged for many commodities including energy, agriculture, and fertilizer due to war and general scarcity, and also in many consumer products as semiconductors remained in short supply. Potash and phosphate fertilizer producer Mosaic (NYSE:MOS) performed strongly as war exacerbated already short supplies of key oil and gas exploration.”
2. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders (Q1): 66
Deere & Company (NYSE:DE) manufactures and sells agricultural machinery, heavy equipment, forestry machinery, diesel engines, drivetrains, and lawn care equipment. For the agriculture sector, the company produces tractors, combine harvesters, cotton harvesters, balers, planters, silage machines, and sprayers. On August 2, Deere & Company (NYSE:DE) announced that it made a minority investment in an African agriculture tech firm, Hello Tractor.
As of August 9, Deere & Company (NYSE:DE) has a dividend yield of 1.32% and a $4.52 annual payout. The latest quarterly dividend of $1.13 was paid on August 8. The company has a payout ratio of 17.71% and has increased its dividend for 2 consecutive years. Over the past 10 years, the company has raised its dividend by 146% and bought back approximately 23% of all its outstanding shares.
On August 10, Deere & Company (NYSE:DE) was priced at $352.36, trading significantly below the 52-week high of $446.76. Moreover, the trailing twelve-month return on equity for the company is 6.17% while the return of equity is recorded at 34.91%.
On July 15, Jefferies analyst Stephen Volkmann maintained a Buy rating on Deere & Company (NYSE:DE) shares and lowered the price target to $400 from $450. Volkmann expects machinery companies to meet or beat the earning estimates for Q2 and believes that some companies might even raise their guidance. Deere & Company (NYSE:DE) is expected to announce its quarterly results on August 19.
Here is what ClearBridge Investments had to say about Deere & Company (NYSE:DE) in its Q2 2022 investor letter:
“In our engagements with farm equipment maker Deere (NYSE:DE), we have followed new technology as it has developed from early promise of environmental and social benefits to market reality. In March 2022, Deere’s Chairman & CEO and CFO met with ClearBridge’s investment team in our New York offices. While prior to the pandemic we had regularly hosted the company, this meeting was among the most interesting as the relatively new CEO outlined a bold plan that placed improved environmental stewardship squarely at the center of the company’s future.
Industrial farming, at its core, is not an especially environmentally friendly enterprise. Agronomic practices have improved over time, but fertilizer, herbicide and pesticide applications and water usage remain problematic. Deere believes its precision farming technology can drive down chemical and fertilizer volumes materially —possibly by as much as 70% — as sensors and cameras attached to tractors, sprayers and combines help determine the exact level of chemicals that might be required…” (Click here to see the full text)
1. CF Industries Holdings, Inc. (NYSE:CF)
Number of Hedge Fund Holders (Q1): 67
CF Industries Holdings, Inc. (NYSE:CF) is a manufacturer and distributor of fertilizers. The company produces ammonia, urea, and ammonium nitrate products. The company operate the world’s largest nitrogen complex in Louisiana.
As of August 9, CF Industries Holdings, Inc. (NYSE:CF) has a 1.6% dividend yield. The company declared a dividend of $0.40 on July 14, payable by August 31 to the shareholders on record as of August 15. In the first half of 2022, CF Industries Holdings, Inc. (NYSE:CF) bought nearly 6.6 million shares worth $590 million. Furthermore, the compound annual growth for the company’s dividend has been 8% in the last 3 years.
On August 3, CF Industries Holdings, Inc. (NYSE:CF) was upgraded to Outperform from Sector Perform with a price target of $118 by Scotiabank analyst Ben Isaacson. The analyst stated that it’s “becoming very difficult not to be bullish nitrogen.”
According to our Q1 database, 67 hedge funds were bullish on CF Industries Holdings, Inc. (NYSE:CF), while Soroban Capital Partners was the firm with the most significant stake in the company. The hedge fund owned 2.6 million shares worth $269.487 million. In the previous quarter, the number of hedge funds bullish on the company were 58.
CF Industries Holdings, Inc. (NYSE:CF) was one of the companies discussed by Carillon Tower Advisers in its first-quarter 2022 investor letter. Here is what the firm said:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. CF Industries (NYSE:CF) manufactures and distributes nitrogen fertilizer. The stock rose as Russia’s invasion of Ukraine accelerated already rising fertilizer prices.”
You can also take a look at 10 Stocks To Buy According to William Von Mueffling’s Cantillon Capital Management and 10 Stocks That Billionaire Rob Citrone Is Selling.
