Mosaic Co (NYSE:MOS) sells fertilizers and is the world’s largest producer of phosphates and potash. Fertilization is perhaps the most important means of increasing yield per acre, so demand for fertilizer will necessarily rise quite rapidly in the years ahead.
Mosaic Co (NYSE:MOS) already has significant global reach with its products reaching countries as diverse as India and Argentina. Its gross margin did fall from 2011 to 2012, but it was still higher than in 2010, and its earnings per share performed similarly. On a positive note, its net sales increased by 12%. It’s a longer-term play, and likely won’ t be a huge performer in the next few months, but if you’re looking for a stock to buy and hold, it’s worth considering.
Adecoagro SA (NYSE:AGRO) provides an opportunity to invest directly in farming, for Adecoagro SA (NYSE:AGRO) is a leading farming company in South America owning over 182,000 acres of farmland. Because the amount of farmland is essentially fixed, a significant portion of the returns to increased productivity should accrue to the landowners, like Adecoagro SA (NYSE:AGRO).
Also, it has invested heavily in sugar production, and recently expanded into the sugar processing industry. This is particularly promising, since sugar is a luxury or near-luxury good; it is demanded heavily by those in the middle and upper classes, but very little by the truly destitute. Thus, the demand for it should increase faster than the demand for food as a whole.
Monsanto Company (NYSE:MON) is at the center of innovation in agriculture. It creates and then sells seed varieties that promise greater yields and other specific advantages.
However, it is a rather controversial company for it sells products that are both dangerous and untested. Thus, it may see a major lawsuit or major reduction in goodwill going forward. However, if you’re willing to accept that risk, it should be at the center of the agricultural revolution. As a result, according to its annual report, it expects 25% annual growth in earnings per share going forward. This isn’t just idle boasting; Monsanto Company (NYSE:MON) saw 28% growth in earnings per share last year.
In Conclusion
All of these companies provide solid exposure to the growth in agriculture going forward. Demand for food will fluctuate in the short term, but it will inexorably rise over the long haul, making these stocks longer-term plays. Deere & Company (NYSE:DE) likely has the best short-term prospects, for it should also profit from the rise in confidence. Monsanto is the most innovation-centered and growing the fastest. But the other two companies might be worth looking into as well.
The article Will People’s Hunger for Food Satisfy Your Hunger for Good Investments? originally appeared on Fool.com and is written by Paul Sangrey.
Paul Sangrey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Paul is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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