We recently compiled a list of the 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Lamb Weston Holdings, Inc. (NYSE:LW) stands against the other farmland and agriculture stocks.
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!
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).
Potatoes being sorted on a conveyor belt in a modern packing facility.
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.
Overall LW ranks 2nd on our list of the best farmland and agriculture stocks to buy. You can visit 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds to see the other farmland and agriculture stocks that are on hedge funds’ radar. While we acknowledge the potential of LW as an investment, our conviction lies in the belief that 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 LW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.