Top 10 Agriculture Stocks To Buy Now

Published on December 12, 2020 at 11:34 am by Alexandr Oleinic in Economy, Hedge Funds, Lists

In this piece, we are going to present you a list of top 10 agriculture stocks to buy now.

Agriculture is one of the oldest activities and probably one of the oldest businesses that has been around for thousands of years. Given the importance of food for sustaining life, it’s not surprising why it has a primordial role in the global economy. However, over the years, agriculture has evolved alongside other industries and has become more interconnected with other segments such as technology and chemicals. This diversification of agriculture into different segments, means that investors have more opportunities to expand their portfolios and to invest not only in companies focused on livestock, grains, farming, but also those that are developing new farming technologies, working on agriculture automation, developing new fertilizers, pesticides, new types of seeds that are more robust and can grow in a harsher environment.

If the diversification alone is not a factor to consider investing in agriculture, then it’s also worth mentioning that many agricultural companies have been around for years and during this period they managed to expand across several continents and have achieved a scale that allows them to shield themselves from environmental, political, or economical shortcomings. Moreover, these companies usually have solid revenue growth, a healthy balance sheet and profits that they are happily using to pay dividends.

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So, if you are looking at some agricultural stocks to invest in, you are likely going to start with a long list of companies. Of course, you could avoid that by focusing on ETFs, such as commodity ETFs like Teucrium Soybean Fund (NYSEARCA:SOYB) or more diversified Invesco DB Agriculture Fund (NYSEARCA:DBA). However, agriculture ETFs are focused on commodities and as far as we know, there isn’t a purely agribusiness stock-focused ETF. This is why we decided to help you and present you with a list of top 10 Agriculture Stocks to buy now.

We have compiled the list of top 10 agriculture stocks to buy now based on one particular metric – the hedge fund sentiment. At Insider Monkey we have been researching hedge funds’ picks for years and have managed to identify companies that substantially outperformed the market. For example, 10 most popular stocks among hedge funds returned 74% between 2015 and 2018, beating the SPY by 42 percentage points. The same strategy of top 10 stock picks returned 28.8% year-to-date amid the pandemic. To find out more about our strategy and which stocks are currently the most popular among hedge funds, you can take a look at 30 most popular stocks among hedge funds: 2020 Q3 Rankings. Additionally, you can check out our premium newsletter and make sure to subscribe to our free daily newsletter to get our latest updates.

Based on our research, we have looked through the data from the latest round of 13F filings to find which agricultural stocks were the most popular among hedge funds. Overall, most agriculture stocks either saw an increase in popularity during the third quarter or recorded a slight decline. Without any further ado, let’s take a look at top 10 agriculture stocks to buy now.

10. Nutrien Ltd (NYSE:NTR)

Let’s start off with Nutrien Ltd (NYSE:NTR), a $28 billion producer of fertilizers. At the end of September, there were 26 funds in our database holding in aggregate $550.38 million worth of company’s stock. This is substantially higher from 22 funds with stakes worth $490.72 million a quarter earlier. Among the top shareholders of Nutrien are Jean-Marie Eveillard’s First Eagle Investment Management and Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which own 23.07 million shares and 9.35 million shares, respectively.

Recently, Nutrien Ltd (NYSE:NTR) has held its 2020 investor day, where it reiterated its confidence that the demand for fertilizers will remain strong, so prices will also remain high. The company said that “fertilizer demand growth has been strong, despite the COVID-19 pandemic, partly aided by good growth in fertilizer applications in China,” among other points.

In its third-quarter earnings report, Nutrien reported an adjusted EPS of $0.23, which was higher than the expected $0.12 and the revenue of $4.21 billion topped the expectations by $380 million. However, the company also took an $823 million writedown on its phosphate fertilizer operations and said that the phosphate market is oversupplied which will keep prices lower for a longer period. In addition, Nutrien also narrowed its 2020 guidance to $1.60 to $1.85 per share from $1.50 to $1.90 previously.

9. Archer-Daniels-Midland Co (NYSE:ADM)

Archer-Daniels-Midland Co (NYSE:ADM) ranks 9th in our list of the 10 best agriculture stocks to buy now. ADM’s stock lost more than 36% in the first months of the pandemic through March 23, but has recovered by more than 72% since then and is currently trading nearly 10% year-to-date. ADM is a food processing and commodities trading corporation that has been around since 1902. The company is involved in processing oilseeds, corn processing, agricultural services for transport and storing of various products used in the processing industry.

Being around for more than a century, Archer-Daniels-Midland Co (NYSE:ADM) has also been paying dividends every quarter for the last 87 years. Moreover, for over 30 years the company has been increasing its dividend every year, which makes it one of 57 Dividend Aristocrats (a list of stocks whose companies have been raising dividends every year for at least 25 years). This impressive feat shows that Archer-Daniels-Midland has strong fundamentals and as the company is highly diversified both across operating segments and geographically, it’s likely that it will keep paying out solid dividends. Most recently, ADM declared a dividend of $0.36 per share, unchanged over the quarter.

At the end of the third quarter, there were 26 funds tracked by Insider Monkey that held shares of Archer-Daniels-Midland Co (NYSE:ADM), down by two funds compared to the end of June. Among these funds, Ric Dillon’s Diamond Hill Capital and John Murphy’s Levin Easterly Partners are the largest shareholders, disclosing stakes worth $276.64 million and $103.50 million, respectively, in their latest 13F filings.

8. Mosaic Co (NYSE:MOS)

In Mosaic Co (NYSE:MOS), the number of funds with bullish positions inched down by one to 31 during the third quarter. However, the total value of these funds’ holdings surged to $714.30 million from $450.16 million. Phill Gross and Robert Atchinson’s Adage Capital Management is the largest shareholder of Mosaic among the funds we track, disclosing a $171.50 million position containing nearly 9.39 million shares. Other investors include David Greenspan’s Slate Path Capital, Arrowstreet Capital, and David Shaw’s D E Shaw.

Mosaic Co (NYSE:MOS)’s third-quarter earnings reported on November 3 resulted in a more than 13% drop in its stock price, even though the results were better than expected. The company’s adjusted EPS topped the expectations by $0.06 and amounted to $0.23, while revenue of $2.38 billion fell by nearly 14% on the year, but still beat the estimates by $11.5 million. However, the GAAP EPS of $0.02 was substantially lower than the consensus estimate of $0.18. The company said that the prices and demand for fertilizers remains strong. Nevertheless, Scotiabank downgraded the stock to Sector Perform from Outperform with a $23 price target, saying that phosphate prices are likely to have more downside than upside. Despite the drop following the third-quarter results, Mosaic Co (NYSE:MOS)’s shares have surged by more than 200% since March 23.

7. AGCO Corporation (NYSE:AGCO)

AGCO Corporation (NYSE:AGCO) ranks 7th in our list of the top 10 agriculture stocks to buy now. AGCO saw the number of investors tracked by Insider Monkey grow by 10 to 31 between July and September and the aggregate value of their holdings advanced to $364.57 million from $144.52 million. Among these investors, the top shareholders are Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital.

Since the beginning of the year, AGCO’s shares appreciated by more than 15% and are 145% in the green since March 23. The company posted a strong third-quarter result, with both EPS of $2.09 and revenue of $2.50 billion beating the estimates by $1.09 and $360 million respectively. During the earnings call, AGCO Chairman and CEO Martin Richenhagen said the full-year demand for farm equipment will remain relatively flat as higher demand in the Americas will be offset by lower demand in Europe. And the company expects net sales of around $8.90 billion for the full year and adjusted operating margins are expected to improve from the last year.

6. CF Industries Holdings, Inc. (NYSE:CF)

CF Industries Holdings, Inc. (NYSE:CF) is next in line in our list of top 10 agricultural stocks to buy now. CF is another manufacturer and distributor of agricultural fertilizers, whose stock is down by nearly 15% since the beginning of the year, as its 80% growth since March 23 did not offset enough the drop prior to that. The company posted a net loss of $0.13 per share for the third quarter and its revenue of $847 million declined by 18% on the year and missed expectations. Nevertheless, the company showed solid results in the previous quarters and analysts have been optimistic about its outlook. In July, Bank of America upgraded a number of agricultural names, including CF Industries, to Buy from Underperform and a month later Citi boosted the stock’s rating to Buy from Neutral and raised the price target to $38 from $29 citing a strong urea demand forecast.

Among the funds in our database, there were 34 funds with long positions in CF Industries Holdings, Inc. (NYSE:CF) at the end of September, compared to 37 funds a quarter earlier. These funds include Matthew Barrett’s Glendon Capital Management and Edgar Wachenheim’s Greenhaven Associates, which disclosed stakes worth $108.80 million and $104.43 million, respectively.

5. Tyson Foods, Inc. (NYSE:TSN)

Tyson Foods, Inc. (NYSE:TSN) ranks fifth in our list of best agriculture stocks to buy now. During the third quarter, the number of hedge funds tracked by Insider Monkey that held shares of Tyson Foods, Inc. (NYSE:TSN) in their portfolios fell by one to 36. Among these investors, the top shareholder is Cliff Asness’ AQR Capital Management, which reported ownership of 1.93 million shares worth $115.08 million, followed by Peter Simmie’s Bristol Gate Capital Partners with a $58.95 million stake containing 991,086 shares. Other investors include Ken Griffin’s Citadel Investment Group, Bernard Horn’s Polaris Capital Management, and Steve Cohen’s Point72 Asset Management.

The stock of one of the largest processors of chicken, beef and pork in the world, is down by more than 22% since the beginning of the year as the company has been hit hard by the pandemic with several facilities closed over outbreaks. However, Tyson posted better than expected EPS and revenue for the last quarter and provided a strong full year-guidance, saying that it expects strong performance of its Beef and Pork segments and growth in Chicken and Prepared foods segments. Recently, Piper Sandler upgraded Tyson Foods, Inc. (NYSE:TSN) to Overvweight from Neutral and raised the price target to $77 from $70. The analyst suggested that a reopening of the economy as a vaccine is released will boost food service sales, although eat-at-home trends will also remain strong.

4. Corteva Inc (NYSE:CTVA)

Next in line is Corteva Inc (NYSE:CTVA), in which also 36 funds disclosed long positions as of the end of September, down by three over the quarter. However, the total value of these funds’ holdings surged to $1.06 billion from $775.39 million a quarter earlier. The increase is mainly due to Jeffrey Smith’s Starboard Value adding Corteva to its portfolio during the third quarter. In its latest 13F, Starboard disclosed ownership of 11.71 million shares of the company worth $337.38 million. Other notable shareholders of Corteva include Ricky Sandler’s Eminence Capital, John Petry’s Sessa Capital, Brandon Haley’s Holocene Advisors, and Larry Robbins’ Glenview Capital.

Corteva is an agricultural and seed company that was spun off from DuPont de Nemours Inc (NYSE:DD) and became an independent public company in 2019. The company’s stock has appreciated by nearly 35% since the beginning of the year. In its latest financial report, Corteva posted an adjusted net loss of $0.39, which topped the consensus estimate by $0.03, while revenue of $2.07 billion increased by 6.7% on the year and beat the estimates by $160 million. The company also reiterated its full-year guidance that includes net revenue growth between 1% and 2% and operating EPS between $1.25 and $1.45.

3. FMC Corp (NYSE:FMC)

There were 41 funds in our database that held long positions in FMC Corp (NYSE:FMC) at the end of the third quarter, compared to 42 funds a quarter earlier. Among these, Ross Turner’s Pelham Capital and Glenview Capital are the top shareholders, with positions worth $128.36 million and $73.56 million, respectively.

FMC Corp (NYSE:FMC) is another chemical company with a focus on agriculture. Since the beginning of the year, shares of the company advanced by nearly 22%, as FMC Corp managed to beat the earnings estimates for at least the past four quarters, although it missed revenue expectations for the last two. Most recently, FMC Corp (NYSE:FMC) declared a quarterly dividend of $0.48 per share, which represents an increase of 9.1% from the previous one. This gives the stock a forward yield of 1.62%.

2. Bunge Ltd (NYSE:BG)

Then there is Bunge Ltd (NYSE:BG), a diversified agribusiness that is involved in acquisition, sale, storing, transportation and processing of grains and oilseeds that is used to produce protein for animal feed and edible oil products for commercial customers. It is also involved in production of ethanol and selling of fertilizers. Bunge Ltd (NYSE:BG) has been reporting mixed results for the past several quarters and its stock has been up by 7% since the beginning of the year and by nearly 88% since March 23. A month ago, Bunge said it would sell its refinery in Rotterdam to Neste Corporation for 285 million euro ($345.5 million) in cash. The deal is expected to close in the first quarter of 2021 and the facility will be then leased from Neste in phased transition that is expected to be completed by 2024.

In Bunge Ltd (NYSE:BG), there are also 41 funds holding long positions based on the latest round of 13F filings, although this number went up by four over the quarter. The largest shareholder of Bunge among the funds we track is Louis Bacon’s Moore Global Investments with a $133.32 million stake followed by Phill Gross and Robert Atchinson’s Adage Capital Management with a $132.46 million position. Israel Englander’s Millennium Management is on the third sport with a $90.76 million stake, after having raised it by more than 50% during the third quarter.

1. Deere & Company (NYSE:DE)

Last but not least, Deere & Company (NYSE:DE) is the most popular agricultural stock among the funds tracked by Insider Monkey. Between July and September, the number of funds bullish on the stock went up by 10 to 42 and the total value of their holdings surged to $1.31 billion from $839.88 million. Jean-Marrie Eveillard’s First Eagle Investment Management holds the largest position, which contains 3.95 million shares worth $875.39 million, followed by Edgar Wachenheim’s Greenhaven Associates with 2.02 million shares worth $447.22 million. Other top shareholders are Tom Gayner’s Markel Gayner Asset Management, Ian Simm’s Impax Asset Management, and Ric Dillon’s Diamond Hill Capital.

Deere & Company (NYSE:DE)’s stock surged by more than 43% since the beginning of the year amid the company posting better than expected financial results, but also showing a revenue decline for the past four quarters, which could partially be attributed to the coronavirus pandemic. However, for the latest quarter, the decline narrowed do just 0.51% on the year with revenue amounting to $8.66 billion and beating the estimates by $1.04 billion. At the same time, the company’s fiscal fourth-quarter (ended November 3) EPS of $2.57 was higher than the expected $1.25. For the current fiscal year, Deere said it will benefit from improving conditions in agriculture, construction and forestry markets. Company’s CEO John May said that there is a renewed optimism in the agricultural sector, which should result in higher demand for farm equipment.