One look at the BG stock price history will tell you that, like many other companies, it enjoyed a post-COVID bull run. It seems to have stagnated since mid-2022 though. Its increasing revenues and the completion of the Viterra merger may finally trigger an upside breakout of the stock price.
Bunge Global is an agriculture and food company specializing in the trade, storage, and transportation of food ingredients, edible oils, and fertilizers. What makes this company unique is its extensive global supply chain and involvement in the entire process from the farm to the end consumer. The company was founded in 1818, headquartered in Chesterfield, Missouri, and has 23,000 full-time employees.
The company is the world’s largest oilseed producer, having processed 76 million metric tons in 2023. It also offers protein meals, which are used primarily in animal feed. Other products include milling products, including wheat flour and dry-milled corn products, and fertilizers like nitrogen-based liquid and solid phosphate fertilizers.
The oil processing business makes up 40% of the company’s total revenue, food products account for around 30%, while fertilizers contribute about 20%.
It operates in more than 40 countries in 5 key regions: North America, Brazil, the Rest of South America, Europe, and the Middle East and Asia. Its end markets consist of food production, animal nutrition, and renewable energy. Top clients include livestock producers, animal feed manufacturers, and food processing companies.
Lower commodity prices, especially those of grains and oilseeds have kept the company’s profits in check. Its strong history of profitability and free cash flow generation already gives it a solid base to operate from even in tough times. However, it is the global operations that set the company apart from the rest of the pack.
The agricultural commodity outlook continues to be mixed heading into the next year. This will likely eat into the company’s margins as the competition lowers prices to gain market share.
What the competition cannot so easily replicate is the global business. If commodity prices continue to stay low, it could stimulate demand in emerging economies, where a vast majority of the global population resides. BG can leverage its global network and optimize its operations to keep its margins healthy.
Bunge Global has also announced its acquisition of Viterra, a company that connects producers and consumers of agricultural products across the world. With the EU approval already in the bag, the merger could happen at any time, further strengthening the company’s role in the global food supply chain.
In short, there are multiple triggers that could result in a price breakout. A healthy dividend yield of over 3% provides a good fallback option in case the upside breakout doesn’t come soon.
Bunge Global SA is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held BG at the end of the second quarter which was 30 in the previous quarter. While we acknowledge the potential of BG as a leading investment, our conviction lies in the belief that some 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 as promising as BG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
