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 Cal-Maine Foods, Inc. (NASDAQ:CALM) 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).
A close-up of an organic egg being carefully washed and inspected before being packaged.
Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Fund Holdings: 24
Based in Mississippi, U.S., Cal-Maine Foods, Inc. (NASDAQ:CALM), through its subsidiaries, makes and sells shell eggs, and is 10th on our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds.
The popularity of the stock has grown in the last 6 months; as of 31 December 2023, 19 hedge fund investors had held a stake in the stock; however, as of 31 March 2024, the number of hedge fund investors has increased to 24! These investors now have a combined investment value of $250.7 million.
For the company’s 3rd quarter of 2024, net sales hit $703 million, while net income stood at $146.4 million mark, which translated into $3.01 per basic common share. Following is what the CFO, Max Bowman, had to speak about the company’s performance for the quarter:
“For the third quarter of fiscal 2024, our net sales were $703.1 million compared with $997.5 million for the same period last year, which was the Company’s highest quarterly sales period with record high average selling prices for conventional and specialty eggs. The decline in sales revenue for the third quarter of fiscal 2024 was primarily due to the significant decrease in egg prices compared to a year ago. However, market prices moved higher sequentially in the third fiscal quarter due to both the recent impact of HPAI and normal seasonal fluctuations.
Our overall sales volumes improved 3.2% compared to the same period last year as we sold 300.8 million dozens compared with 291.4 million dozens for the third quarter of fiscal 2023. Conventional eggs sold reached 192.2 million dozens, up 2.6%, while specialty eggs sold were 108.6 million dozens, a 4.4% increase over the prior-year period. These results represent the highest total dozens sold and highest specialty dozens sold in any quarter for Cal-Maine Foods.”
Overall CALM ranks 10th 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 CALM 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 CALM 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 is originally published at Insider Monkey.
