We recently compiled a list of the 10 Worst Farmland and Agriculture Stocks to Buy According to Short Sellers. In this article, we are going to take a look at where Bunge Global SA (NYSE:BG) stands against the other farmland and agriculture stocks.
The $5 trillion food and agriculture sector has experienced significant changes over the past six decades. Technological advances, resource allocation, and production processes drove these changes. The global agricultural output has been impacted by the Green Revolution of the 1960s as well as the advancements in modern biotechnology. According to the US Department of Agriculture (USDA), the production of the agriculture sector quadrupled between 1961 and 2020. This jump is largely due to technological advancements and increased land use. Therefore, innovations over the years have enabled the sector to meet the ever-increasing demand. However, this industry is still facing challenges. Productivity growth has stunted over the past decade, which creates concerns regarding the sector’s ability to meet the world’s increasing demand.
Furthermore, the global agricultural sector has changed dramatically over the years, owing to the increasing involvement of the Global South (Africa, Asia, and Latin America) in overall production. The region contributed an astounding 73% to the global output by 2020. According to McKinsey & Company, the Global South’s contribution to overall production is expected to grow as emerging markets look to modernize their agricultural sectors. Such a change has been majorly driven by technological changes in crop science, irrigation systems, and machinery, enabling the sector to gain larger yields given the same amount of land. Moreover, easing inflation in the U.S. toward the end of 2024 resulted in reduced input costs, especially energy costs, meaning improved margins for the sector.
However, the Total Factor Productivity (TFP) – an important metric for assessing resource management efficiency in agriculture – has faced a slump in recent years. The global TFP has dropped to 0.9% in the last decade, compared to 1.6% in the early 2000s. With the global food demand expected to increase by 60% by 2050, a slowdown in productivity growth comes as a major concern. This stagnation could lead to a rise in food prices, an expansion of agricultural land, and elevated pressure on ecosystems that are already under pressure due to climate change. Around such skepticism, the Farm Products sector has experienced negative returns on a YTD and 6-month basis, while S&P reported 5.80% return on a 6-month basis.
To mitigate these concerns, the agricultural sector needs to counter the global demand with sustainability. Accordingly, McKinsey highlights the need for investment in innovative technologies like precision agriculture, artificial intelligence, and satellite-based monitoring systems. Such technologies can add to efficiency as well as a reduction in the industry’s environmental footprint. For instance, farmers are now able to make informed decisions through AI-driven data analytics, leading to an improvement in yield forecasting and optimization of input usage. It is expected that investment in relevant technologies could lead to an increase of over 25% in the agricultural output over the next 10 years, according to McKinsey.
Methodology
For this article, we shortlisted a list of stocks within the agricultural inputs and farm products sectors using the Finviz screeners. We also considered our previous articles on the industry to ensure relevant inclusions in our list. Using the extensive list, we selected companies that demonstrated strong market capitalization.
Next, we looked into the number of hedge funds invested in these companies, which is considered a dependable indicator of firm performance. Moreover, we noted down the short percentage of float for all the companies, which is a testament to the negative sentiment or short interest in the stock. Finally, the shortlisted stocks were ranked in ascending order of their short percentage of float.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Aerial view of an orchard of different fruits, representing the abundance of the agribusiness.
Bunge Global SA (NYSE:BG)
Number of Hedge Funds: 38
Short % of Float: 6.50%
Bunge Global SA (NYSE:BG) manages the sourcing, processing, and distribution of essential crops like soybeans, wheat, and corn. The company plays a vital role in sustaining the global agricultural trade flows with a vast supply chain that supports animal feed, food production, and renewable fuels.
Bunge Global SA (NYSE:BG) recorded adjusted earnings per share of $2.13 per share for Q4 ended December 31, 2024, a drop from $3.70 in the prior year. Uncertainty surrounding U.S. biofuel regulations and margin pressures in South America were reflected through the company’s core business’s adjusted EBIT, which stood at $548 million. However, despite these challenges, results were stabilized due to improved merchandising performance and substantial processing operations in Europe and Asia. On the other hand, the milling segment posted mixed performance, with North American strength offset by weaker results in South America.
Furthermore, a significant progress was made regarding Bunge Global SA (NYSE:BG)’s $34 billion merger with Viterra, as Bunge acquired conditional approval from the Canadian government on January 12, 2025. Accordingly, the company is bound to invest at least $362 million in the country in the next five years and divest six-grain elevators in Western Canada. This merger will improve the company’s global footprint and supply chain efficiency. It is also recorded as one of the largest agricultural deals in history. In addition to that, Bunge has also been able to streamline processes and focus on core segments as it achieved the sale of its sugar and bioenergy joint venture in Brazil back in June 2024.
Moreover, strengthening its commitment to shareholder value in 2024, Bunge Global SA (NYSE:BG) repurchased $1.1 billion worth of shares, while also paying $378 million in dividends. Unfortunately, despite these strategic steps, the company is placed on the list of worst farmland and agriculture stocks to buy according to short sellers as it’s facing margin issues in South America and regulatory issues in the U.S.
Overall BG ranks 5th on our list of the worst farmland and agriculture stocks to buy according to short sellers. While we acknowledge the potential of BG as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
