We recently published a list of 10 Best Wide Moat Stocks to Invest In. In this article, we are going to take a look at where Corteva, Inc. (NYSE:CTVA) stands against other best wide moat stocks to invest in.
Russell Investments continues to monitor and analyze the potential for policy changes in President Trump’s second term in office. In December 2024, the North American Chief Investment Strategist noted 4 areas of focus- i.e., tariffs, immigration, fiscal policy, and deregulation. Let us see what impact tariffs can have on the broader US economy and what should investors do in these uncertain circumstances.
Impact of Tariffs on US
As per Russell Investments, the macroeconomic uncertainty is expected to continue to remain elevated in the near term, while the investors keenly wait to see whether the tariffs get scrapped after the 30-day period. To give a brief context, the US President announced that he and Mexican President Claudia Sheinbaum have decided to delay the imposition of these tariffs for 30 days. Notably, Trump also announced that he has delayed the imposition of tariffs on Canadian goods for 30 days.
If tariffs get implemented, there can be a modest one-time increase in price levels for US consumers, says the investment firm. This might push out marginally when inflation will return to the target range of 2%. However, in the base-case scenario, the firm expects that the US Fed will succeed in returning inflation to 2%. From a growth perspective, while the tariffs might create a modest drag on the US economic activity, the broader economy is expected to avoid a recession.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What Should Be the Strategy for Investors?
Saxo Bank A/S believes that investors are required to ignore the noise and remain focused on fundamentals. While short-term volatility remains inevitable, investors need to prioritize long-term growth trends over reactionary trades. Therefore, investing in quality companies having strong domestic revenue, pricing power, and resilient business models is expected to withstand such headwinds. The bank believes that investing in high dividend-paying stocks in defensive sectors such as consumer staples might help mitigate the short-term negative impacts. Furthermore, the focus can be on secular growth themes that have the potential to transcend political cycles.
Elsewhere, Russell Investments opines that investors can benefit from staying disciplined during uncertain times. While the tariffs can adversely impact the broader economic growth, mainly in Mexico and Canada, there is a possibility of central banks and governments stepping in with support to mitigate the impacts of tariffs.
Our Methodology
To list the 10 Best Wide Moat Stocks to Invest In, we scanned through VanEck Morningstar Wide Moat ETF and some online rankings. Next, we chose the stocks that were popular among hedge funds. Finally, the stocks are arranged in the ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with 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 farmer in overalls, harvesting a golden cornfield with a tractor in the background.
Corteva, Inc. (NYSE:CTVA)
Number of Hedge Fund Holders: 33
Corteva, Inc. (NYSE:CTVA) operates in the agriculture business. The company has a wide economic moat rating, owing to its portfolio of patented biotech seeds and crop chemicals. Such patented products are well-placed to command pricing power as they shield farmer yields and reduce other expenses like insecticides, says Morningstar. Corteva, Inc. (NYSE:CTVA)’s intangible assets stem from the R&D needed for the continual development of proprietary seed and crop chemical formulations. As and when patents expire and crop pests build some resistance to current products, the seeds possessing new traits and chemical formulations are required to be developed.
Therefore, well-established companies are required to invest in R&D. Morningstar reported that Corteva, Inc. (NYSE:CTVA) invests ~8% of sales in new product development each year, in line with its competitors. Morningstar added that seeds generate the majority of profits, and it remains confident that this business will continue to garner excess returns on invested capital for a minimum of 20 years.
Barclays analyst Benjamin Theurer upped the company’s price objective to $64 from $62, keeping an “Equal Weight.” The firm continues to have an optimistic outlook on crop protection and is confident in diversified international protein names and ingredients. RBC Capital raised the target to $73 from $68, keeping an “Outperform” rating. RBC highlighted that Corteva, Inc. (NYSE:CTVA)’s strong product offerings and technology can help fuel pricing power to partially offset FX headwind impact.
Overall, CTVA ranks 10th on our list of best wide moat stocks to invest in. While we acknowledge the potential of CTVA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CTVA 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.
