In this article, we will explore the 10 best organic food and farming stocks to invest in.
The Rise of Organic Food and Farming
Organic farming practices focus on using natural methods to cultivate crops, avoiding synthetic fertilizers and pesticides. This approach not only enhances the quality of food but also contributes to preserving biodiversity and maintaining healthy ecosystems. The organic food and farming sector provides economic benefits as well, creating jobs and supporting rural communities.
The global organic food and farming industry has experienced significant growth in recent years, reflecting a shift in consumer preferences towards healthier and more sustainable food options. According to a report by The Business Research Company, the global organic food market was valued at $244.82 billion in 2023. The market is expected to grow at a compound annual growth rate (CAGR) of 15.1% during 2024-2028 to reach a value of $489.75 billion by the end of the forecast period. This growth is largely driven by increasing awareness of health benefits associated with organic products and a growing concern for environmental sustainability.
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The 25th edition of the yearbook “The World of Organic Agriculture,” published by the Research Institute of Organic Agriculture (FiBL) and IFOAM – Organics International, highlights significant growth in the organic farming sector. Presented in February 2024 at the BIOFACH trade fair in Nuremberg, Germany, the report reveals that by the end of 2022, the area under organic management reached 96.4 million hectares. This marks an impressive increase of 26.6% or 20.3 million hectares compared to the previous year.
Australia continues to lead the world in organic farming area, boasting 53 million hectares, an increase of 17.3 million hectares. The report shows that organic farming area increased across all continents, reflecting a global trend towards more sustainable agricultural practices. In terms of producers, the number of organic farmers worldwide rose to 4.5 million in 2022, which is nearly a 26% increase from 2021.
Support for organic agriculture is gaining momentum globally, with many countries implementing action plans to promote organic farming practices. The number of fully implemented national regulations for organic agriculture rose to 75 in 2023, indicating a commitment to enhancing and regulating this sector.
According to the report, the global organic market reached nearly EUR 135 billion in 2022. The United States was the largest market, valued at approximately EUR 56.6 billion, followed by Germany at EUR 15.3 billion and China at EUR 12.4 billion. While some European countries saw a decline in organic sales, Canada and the US experienced growth in retail sales, with increases of 9.7% and 4.4%, respectively. These figures indicate that consumer interest in organic products is strong, particularly in North America, where health consciousness is driving demand.
With this background in mind, let’s take a look at the 10 best organic food and farming stocks to invest in.
A busy farmer in a field with an abundant crop of organic food.
Methodology
To compile our list of the 10 best organic food and farming stocks to invest in, we looked for the largest organic food and farming companies. We also reviewed our own rankings and consulted various online resources to compile a list of the best organic food and farming stocks. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best organic food and farming stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
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10 Best Organic Food and Farming Stocks To Invest In
10. Gladstone Land Corporation (NASDAQ:LAND)
Number of Hedge Fund Holders: 5
Gladstone Land Corporation (NASDAQ:LAND) is a real estate investment trust (REIT) that focuses on acquiring and owning farmland and farm-related properties in key agricultural markets across the US. The company currently owns 168 farms, totaling approximately 112,000 acres in 15 states, along with nearly 54,000 acre-feet of water assets in California. The company’s farms primarily produce annual row crops like berries and vegetables, as well as permanent crops such as almonds, apples, and pistachios. Notably, about 30% of its fresh produce acreage is organic or transitioning to organic, highlighting the company’s commitment to promoting organic farming practices. Gladstone Land Corporation (NASDAQ:LAND) is one of the best organic food and farming stocks to invest in.
In the third quarter of 2024, the company executed 21 new or amended lease agreements. This included renewing eight leases on annual row crop farms, which are expected to increase annual net operating income by approximately $309,000. However, some leases on permanent crop farms resulted in a projected decrease in net operating income by about $441,000. In October 2024, Gladstone Land Corporation (NASDAQ:LAND) announced the sale of 11 blueberry farms for around $5 million. This strategic move allows the company to focus on more profitable ventures while maintaining a strong level of liquidity.
In October, the company declared a monthly dividend of $0.0467 per share for the fourth quarter, totaling $0.1401 for the quarter. With its diverse portfolio of farmland, commitment to organic farming practices, and strategic management aimed at increasing profitability, Gladstone Land Corporation (NASDAQ:LAND) presents an attractive investment opportunity. The ongoing demand for fresh produce and the company’s focus on improving its operations make it a compelling choice for investors interested in the organic food sector.
9. Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC)
Number of Hedge Fund Holders: 9
Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) is a specialty retailer focused on natural and organic groceries, dietary supplements, and body care products. The company emphasizes high-quality standards, ensuring that its products do not contain artificial colors, flavors, or preservatives. Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) exclusively sells USDA-certified organic produce, pasture-raised dairy products, and free-range eggs. NGVC is one of the best food stocks to buy.
In the fourth quarter of fiscal 2024, Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) reported a 9.3% increase year-over-year in net sales, reaching $322.7 million. Net income surged by 53.2% to $9.0 million during the same period. This growth reflects the company’s successful strategy of enhancing customer engagement and expanding its product offerings. Throughout fiscal 2024, Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) introduced 80 new products, contributing to its diverse inventory. The company opened four new stores during the year, bringing its total to 169 locations across 21 states. These expansions indicate a commitment to growth and increasing market presence.
In fiscal 2024, Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) generated $73.8 million in cash from operations while investing $38.6 million in capital expenditures, primarily for new and remodeled stores. Over the past five years, the company has achieved a remarkable 37% increase in net sales, with diluted earnings per share more than tripling during this time. During this period, Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) also returned $108 million to shareholders through dividends, highlighting its strong financial health and commitment to providing value to investors.
With its focus on high-quality organic products, consistent sales growth, and strategic expansion plans, Natural Grocers by Vitamin Cottage Inc. (NYSE:NGVC) presents a compelling investment opportunity in the organic food sector.