In this article, we are going to shed light on the 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds.
There is seen to be quick consolidation in the agricultural market of U.S., especially, and the industry is marked by a rapid boom in technological and operating efficiency. Agricultural farms, which have internet access, saw an uptick, as the percentage of such farms grew from 75% in 2017 to 79% in 2022, according to the United States Department of Agriculture. Moreover, a 15% increase in farms was seen that relied on renewable energy-producing systems, whereby, 76% of the total farms in the U.S. were reported using solar energy. Furthermore, supply chain efficiency is also on the rise as the value of direct sales to consumers in 2022 by 116,617 farms rose by 16% to $3.3 billion, as compared to 2017.
As such, the number of farms in the U.S. is falling; there exist 1.89 million farms in 2023, which is a fall of 7%, as compared to 2.04 million farms in 2017. Likewise, the land size has also seen a decrease of 21 million acres of land from 900 million acres in 2017 to 879 million acres in 2023. One of the driving forces for this loss is growing urbanization, which is resulting in the loss of 2,000 acres of farmland every day for residential or commercial purposes, according to the American Farmland Trust. Thus, the industry marked by technological advancements and innovation in animal and crop genetics, equipment, and chemicals means farmers getting out more from less land, meaning a fall in total farms.
After a stellar performance in 2022, wherein the industry recorded $196.4 billion in inflation-adjusted net farm income, it is expected to hit $116.1 billion in the broader sense (not adjusted for inflation) in 2024, which would be a decrease of $39.8 billion, as compared to 2023, a year which also saw a decrease of $29.7 billion relative to 2022. This is seen on the back of rising operating costs, lower animal products receipts, and lower direct government payments in the industry.
On a side note, the industry has also faced challenges due to the Russia-Ukraine war – primarily because both countries are two of the biggest exporters of grain globally, with the level of their exports in 2022 being 11.2 million tons and 21.6 million tons, respectively! The outcome of the conflict has come in handy, as can be seen from the agriculture stocks, like MSCI Agriculture Producers ETF, which although, did climb up in April 2022 due to increasing prices of commodities, has fallen 24% till March 22, 2024, as compared to the pre-conflict time in 2022. Furthermore, while the ETF has recorded total returns of 18.78% and 22.27% in 2020 and 2021, the returns have fallen sharply in the following two years 2022 and 2023, wherein, the returns were 6.65% and negative 8.51%, respectively, speaking about the global impact the conflict has played out on the agricultural sector.
Nevertheless, considering the challenges the agricultural sector is facing right now, we will take you back to what Warren Buffet, one of the most successful investors of all time, said amidst the 2008 financial crisis, “Be fearful when others are greedy, and be greedy when others are fearful.” Thus, on this note, let’s now have a look at the 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds.
Methodology
To curate our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds, we referred to the Yahoo Finance stocks screener filtering out around 20 stocks based on the industry and market. From the preliminary list, we then ranked the stocks based on the number of hedge fund holdings, as of 1st quarter of 2024, in an ascending order. With this, let’s now jump to our list of the 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds. Also, it’s important to note that all the stock prices quoted anywhere are as of 24th June 2024, unless otherwise stated.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Fund Holdings: 24
Based in Mississippi, U.S., Cal-Maine Foods, Inc. (NASDAQ:CALM), through its subsidiaries, makes and sells shell eggs, and is 10th on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds.
The popularity of the stock has grown in the last 6 months; as of 31 December 2023, 19 hedge fund investors had held a stake in the stock; however, as of 31 March 2024, the number of hedge fund investors has increased to 24! These investors now have a combined investment value of $250.7 million.
For the company’s 3rd quarter of 2024, net sales hit $703 million, while net income stood at $146.4 million mark, which translated into $3.01 per basic common share. Following is what the CFO, Max Bowman, had to speak about the company’s performance for the quarter:
“For the third quarter of fiscal 2024, our net sales were $703.1 million compared with $997.5 million for the same period last year, which was the Company’s highest quarterly sales period with record high average selling prices for conventional and specialty eggs. The decline in sales revenue for the third quarter of fiscal 2024 was primarily due to the significant decrease in egg prices compared to a year ago. However, market prices moved higher sequentially in the third fiscal quarter due to both the recent impact of HPAI and normal seasonal fluctuations.
Our overall sales volumes improved 3.2% compared to the same period last year as we sold 300.8 million dozens compared with 291.4 million dozens for the third quarter of fiscal 2023. Conventional eggs sold reached 192.2 million dozens, up 2.6%, while specialty eggs sold were 108.6 million dozens, a 4.4% increase over the prior-year period. These results represent the highest total dozens sold and highest specialty dozens sold in any quarter for Cal-Maine Foods.”
9. AGCO Corporation (NYSE:AGCO)
Number of Hedge Fund Holdings: 25
By offering horsepower tractors for row crop production, soil cultivation, planting, land leveling, seeding, and commercial hay operations; and, utility tractors for small- and medium-sized farms, AGCO Corporation (NYSE:AGCO) is an agricultural equipment provider, headquartered in Duluth, Georgia, U.S. It is 9th stock on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds.
Analysts are seeing quite a bright future for the stock, as they have set the target share price at a whopping $132.5, as compared to its current price of $101; this means an upside potential of an astonishing 31.2%!
Furthermore, 25 hedge funds out of 933 hedge funds that Insider Monkey tracks have their stakes in the stock, with a value of 388.97 million! AQR Capital Management and Turiya Advisors have the highest stake in the stock, with values of $140 million and $95.1 million, respectively.
8. Ingredion Incorporated (NYSE:INGR)
Number of Hedge Fund Holdings: 26
Engaged in the operations of making and selling sweeteners, starches, nutrition ingredients, and biomaterial solutions made from wet milling and processing corn, Ingredion Incorporated (NYSE:INGR) is 8th on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds. Headquartered in Westchester, Illinois, Ingredion Incorporated (NYSE:INGR) has an interest of 26 hedge funds, boasting a value of $468.5 million.
Earnings per share (EPS) for the current quarter of 2024, ending June, is expected to be somewhere around $2.56, according to analysts at Yahoo Finance, as compared to its year-ago EPS of $2.32. From its current price of $115.5, the analysts eye a target price of $128, which would mean an upside potential of a staggering 10.8%!
A total of 26 hedge funds have invested in the stock, with the value of investment being $468.5 million, wherein, the biggest chunks belong to Yacktman Asset Management and Millennium Management who have invested amounts of $257.8 million and $81.5 million, respectively, as of 1st quarter of 2024.
7. Bunge Global SA (NYSE:BG)
Number of Hedge Fund Holdings: 30
Bunge Global SA (NYSE:BG), which is an agribusiness and food company, operates through its four segments: Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy. It is placed 7th on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds.
9 out of 11 analysts have held “buy” and “hold” positions for the past 3 months, with the average 12-month target stock price being $117.9, as compared to its current price of $105.9, which would be a decent upside return of 11.3%! Citigroup analyst, Thomas Palmer, has increased their price target of the stock to $117 as well, as compared to their previous target of $108.
Adjusted EPS over the last 5 years has grown at a cumulative growth rate of 10.14%, with quarter 1 2024 trailing twelve months adjusted EPS being $13.45. Furthermore, 30 hedge funds have a stake in the stock, worth $232.4 million.
6. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holdings: 33
Running four segments, Retail, Potash, Nitrogen, and Phosphate, Nutrien Ltd. (NYSE:NTR) offers crop inputs and services, and sits at 6th place on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds.
In comparison to industry performance, Nutrien Ltd. (NYSE:NTR) is doing better, as, while Nutrien has lost 12.5% of its share price in the last 1 year, the industry has declined 15.9%! The stock scored a revenue of $5.389 billion, which was above Zacks Consensus Estimate of $5.375 billion.
As of 1st quarter of 2024, 33 hedge funds carry interest in the stock, with the value of investment being $694.97 million; First Eagle Investment Management and Millennium Management are two of the biggest investors in the stock with their investments amounting to $519 million and $209 million, respectively!
5. Tyson Foods, Inc. (NYSE:TSN)
Number of Hedge Fund Holdings: 36
Tyson Foods, Inc. (NYSE:TSN) operates within four food segments: Beef, Pork, Chicken, and Prepared Foods. Founded in 1935, Tyson Foods, Inc. (NYSE:TSN) is headquartered in Arkansas, U.S. The stock is placed 5th on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds.
36 hedge funds out of 933 hedge funds that Insider Monkey tracks hold investments in the stock, with a total value of $1.4 billion! The number of hedge fund holdings has increased from 29 to 36 on a quarterly basis, while the investment rose from $1.1 billion in the last quarter.
Pzena Investment Management and Yacktman Asset Management hold the largest interest in the stock, worth $619.6 million and $181.4 million, respectively. Moreover, the analysts have set a stock price target of $60.9, as compared to its current price of $56.3, which carries an upside potential of 8.2%.
For the second quarter of 2024, the company converted its year-ago adjusted operating income of 65 million to $406 million; furthermore, the earnings per share also rose from negative $0.04 from the quarter a year ago to $0.62 for the current quarter!
“During the second quarter, we continued our positive momentum and made progress on our key initiatives. The strategies we have implemented are delivering tangible results, as evidenced by our return to year-over-year bottom line growth,” said Donnie King, President & CEO of Tyson Foods. “Looking to the back half of the year, we will continue to focus on executing the fundamentals and leveraging our multi-protein portfolio. We are energized by our progress to-date and laser-focused on driving long-term value.”
4. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holdings: 38
The Mosaic Company (NYSE:MOS), headquartered in Florida, U.S., runs through its three segments: Phosphates, Potash, and Mosaic Fertilizantes. By doing so, it produces and sells phosphate and potash crop nutrients.
In the 1st quarter of 2024, the company scored sales of 2.2 million tons for its potash segment, translating it into an EBITDA of $281 million. On the other hand, the phosphates segment was able to bag a sales volume of 1.6 million tons, reflecting an adjusted EBITDA of $277 million.
Currently, 28 hedge funds have invested in The Mosaic Company (NYSE:MOS), with investments totaling $579.2 million. The biggest chunk of these investments belongs to D E Shaw, who holds a value of $111 million!
5 out of 6 analysts have held on to the stock for the last 3 months, with the price target of the stock being set at $35.4, as compared to its current price of $27.8, which would translate into an upside potential of a whopping 27.3%!
This is what President and the CEO, Bruce Bodine spoke about the company’s outlook, as of 2024 first quarter:
“First, the transaction we announced with Ma’aden highlights our commitment to unlocking shareholder value. Exchanging our 25% stake in the MWSPC joint venture for an approximately $1.5 billion position in Ma’aden provides a clear indication of value and greater capital flexibility in the future; second, we are making good progress on several high-return, low-capital intensity initiatives that will improve results across the commodity cycle; and third, fertilizer market fundamentals remain constructive and the phosphate supply and demand picture is particularly compelling.
As the North America spring planting season winds down and fertilizer prices have moderated, fertilizer demand strength is now emerging in other key agricultural geographies, which will bode well for pricing in the second half of the year.
We have several other ongoing initiatives to drive improved returns. Our $150 million cost reduction plan is on track and delivering early results. Potash production cash cost per tonne declined about $10 in the first quarter compared with the same period in the prior year. We are rightsizing our workforce and have identified opportunities to reduce our third-party contractors over the next 18 months, which will result in $20 million to $30 million in annual cost savings when complete. We are making progress on our SG&A expense management. With our first quarter SG&A expenses down by $21 million or 16% compared with a year ago.”
3. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holdings: 40
Operating across the regions of the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, and the United Kingdom, Archer-Daniels-Midland Company (NYSE:ADM) is engaged in the transportation and procurement of agricultural commodities, ingredients, flavors, and solutions.
It is placed 3rd on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds, as 40 hedge funds have invested in the stock; this investment totals $966.4 million, the largest chunk of which is invested by D E Shaw, worth $259.6 million! Furthermore, the popularity of the stock has grown on a quarterly basis, as the number of hedge fund investors rose from 34 to 40 in Q1,24, while the investment value rose 17.95% over the quarter. 14 analysts have a price target set at $62.91, as compared to its current price of $61.35.
As of the 1st quarter of 2024, the adjusted average return on invested capital (ROIC) for the last four quarters is a decent 11.2%. Following is what Juan Luciano, the CEO, had to say about the company’s performance for the 1st quarter 2024 and its 2024 outlook:
“ADM reported first quarter adjusted earnings per share of $1.46, adjusted segment operated profits of $1.3 billion, and a trailing fourth quarter average adjusted ROIC of 11.2%. Our first quarter operating cash flow before working capital was $900 million. In a year where the buildup of grain and oil seeds supply is expected to create pressure on margins, our teams are proactively taking action to manage through the cycle, driving structural earnings, ROIC, and cash flow generation. Our strong performance and disciplined management of our balance sheet continue to allow us to invest in our business and return cash to shareholders.”
2. Lamb Weston Holdings, Inc. (NYSE:LW)
Number of Hedge Fund Holdings: 42
Headquartered in Idaho, U.S., Lamb Weston Holdings, Inc. (NYSE:LW) makes and sells frozen potato products, along with other vegetables and dairy products.
The stock is quite popular amongst investors, as 42 hedge funds have stakes in the stock worth $1.979 billion; Stockbridge Partners is the biggest investor in the stock with an investment of $401.4 million!
Furthermore, scenes are quite the same with analysts as well, as they have set a price target of a staggering $108.24, as compared to its current price of $84.85; that’s an upside potential of a massive 27.57%!
Analysts’ judgment about the stock can be justified through the company’s performance in its fiscal 3rd quarter of 2024, wherein, the net sales shot up 16% YoY to $1.458 billion; furthermore, the company managed to pay $40 million in cash dividends to its common shareholders. Moreover, for the year 2024, the company eyes an adjusted EPS of somewhere between $5.5 to $5.65, on the back of a forecasted net income of around $800 million.
1. Corteva, Inc. (NYSE:CTVA)
Number of Hedge Fund Holdings: 50
Number 1 on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds is Corteva, Inc. (NYSE:CTVA), which functions within the agriculture business through its two segments, crop protection and seed processing.
As of quarter 1 of 2024, 50 hedge funds held interest in the stock, with the value accumulating to a whopping $1.4 billion! Harris Associates and Glenview Capital are the two biggest entities with interest in the stock, holding the stock worth $733.9 million and $391.4 million, respectively. The popularity of the stock is seen to be quite high as both these entities increased their holding in the stock by 42% and 45%, respectively, from the previous quarter. Moreover, the average target price set by 22 and 14 analysts is roughly around $63, which carries an upside potential of 19%, as compared to its current price of $52.92.
While we acknowledge the potential of Corteva, Inc. (NYSE:CTVA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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