8 Worst Small Cap Agriculture Stocks to Buy

5. CNH Industrial N.V. (NYSE:CNH)

Number of Hedge Fund Holders: 42

% of Short Float: 6.19%

CNH Industrial N.V. (NYSE:CNH) is a global manufacturer of agricultural and construction equipment that operates through three segments: Agriculture, Construction, and Financial Services. The company offers a diverse range of agricultural machinery, construction equipment, and precision agriculture solutions under well-known names like Case IH, New Holland, and STEYR.

Despite reaching $600 million in run-rate savings by the end of 2024 and lowering dealer inventory by over $700 million in the fourth quarter that ended December 31, 2024, CNH Industrial (NYSE:CNH) reported a large drop in sales. Industrial net sales fell 31% in the fourth quarter to $4.1 billion, contributing to a 23% decrease in full-year revenue to $17.1 billion. Furthermore, the adjusted EBIT margin declined to 8.2%, 370 basis points lower than the previous year, while the agriculture gross margin fell to 20.6% in Q4.

Moreover, the company indicated a negative free cash flow of $401 million for the fiscal year 2024, creating worries regarding liquidity management. Agricultural output hours declined 34% year-on-year in Q4, and the company intends to reduce production by another 15-20% by 2025. Further, CNH Industrial (NYSE:CNH) estimates worldwide industry demand to fall by 5-10% in 2025, with its agriculture division experiencing a 13-18% drop in net sales due to its reliance on North American cash crop equipment.

On the other hand, rising delinquencies in CNH’s Financial Services business heightened investor concerns, with portfolio delinquencies rising to 1.9% from 1.4% at the end of 2023. The business also decreased its earnings projection for 2025, expecting EPS of $0.65-$0.75, down from $1.05 in 2024.

Furthermore, the poor financial outlook and diminishing profitability have resulted in an increase in short interest as investors bet against the stock. Given these rising challenges, CNH Industrial (NYSE:CNH) has become a short sellers’ target, making it one of the worst agriculture stocks to invest in.