Tractor Supply Company (TSCO), Deere & Company (DE), Mosaic Co (MOS): How Should Investors Play the Domestic Agriculture Sector?

Of course, the industry’s structure is always a concern, as two cartel-like associations control much of the international supply of potash.The announcement in late July of a potential breakup of one of the groups, BPC, led to fears of product price declines, which hit the stock prices of the potash producers, including Mosaic Co (NYSE:MOS).While potentially lower future prices and the negative effect on Mosaic’s operating margin are negative, the company’s valuation below book value makes it a low-risk option on future growth in fertilizer demand as the world’s agriculture sector increases its purchases to meet the production needs of a rising population.

Aggregate income for U.S. farms in 2013 is likely to come in not far behind the record level of the prior year, meaning that investors need to be on the lookout for investment opportunities in the sector.  While Deere & Company (NYSE:DE) and Mosaic Co (NYSE:MOS) have near-term downside exposure to continued weakness in the eurozone, all three companies are leaders in their segments and should benefit from long-term growth in the agriculture sector’s output.Hence, they belong on the watchlist of any investor looking into agriculture.

The article How Should Investors Play the Domestic Agriculture Sector? originally appeared on and is written by Robert Hanley.

Robert Hanley owns shares of Tractor Supply Company. The Motley Fool has no position in any of the stocks mentioned.

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