Potash Corp./Saskatchewan (USA) (POT), Mosaic Co (MOS): Agriculture Firms to Have on Your Radar

Investing in the company that manufactures the tools farmers need to harvest crops as global food demand increases, often makes for a sound investment. AGCO Corporation (NYSE:AGCO) appears to be undervalued, as it has a forward PE ratio of about 8.9. However, firms such as AGCO Corporation (NYSE:AGCO) are facing a tough time with increased environmental regulations, which means that company has to recreate many of its engines to meet the new standards. That can cost a lot of money and decrease the profit margin substantially. However, that short-term setback will likely be overcome by AGCO Corporation (NYSE:AGCO), as operations become more efficient in the future.

Common denominator

All three companies are weighted heavily on the world economy due to the fact that much of the demand for food comes from abroad. That is an uncomfortable fact for investors, because while economic indicators in the United States have been especially solid over the past several months, the same can’t be said for nations throughout the world. However, trying to predict the short-term prospects of the global economy is a guessing game; knowing that the demand for food will increase in the long-run is not. Investing in both fertilizer and agriculture equipment are surefire ways to get in on that rising food demand, though investors may experience short-term losses before the world economy recovers and food demand surges.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article 3 Agriculture Firms to Have on Your Radar originally appeared on Fool.com is written by Phillip Woolgar.

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