We recently published a list of 14 Best Farmland and Agriculture Stocks to Buy Now. In this article, we are going to take a look at where Fresh Del Monte Produce (NYSE:FDP) stands against other best farmland and agriculture stocks to buy now.
The American Agriculture Sector and Trump’s Tariffs
At the beginning of March, the White House announced the imposition of 25% tariffs on goods from Mexico and Canada and additional 10% tariffs on China. While President Trump granted a one-month tariff delay for automakers and paused the same for certain Mexican and Canadian goods until April 2, he announced in an interview with Fox News that tariffs “could go up” with time.
Since tariffs on Chinese goods weren’t a part of the exemptions, China imposed retaliatory tariffs on the US, particularly targeting US agricultural goods. Specifically, a 10% tariff was imposed on American soybeans, while corn was hit with an additional 15% charge. CNBC reported that China is prepared to fight “any type of war” with the United States. The news channel reported that the Chinese Embassy in the US reported in a post on X:
“If war is what the U.S. wants, be it a tariff war, a trade war, or any other type of war, we’re ready to fight till the end.”
A Chinese foreign ministry spokesperson also labeled the American fentanyl-related explanation for imposing tariffs a “flimsy excuse.”
READ ALSO: 10 Best Consumer Staples Stocks to Buy According to Analysts and 10 Best Mid Cap Biotech Stocks to Buy.
Could Tariffs Reduce Agriculture Goods Prices for Americans?
On March 4, Landus Cooperative CEO, Matt Carstens, appeared on CNBC’s ‘The Exchange’ to talk about how tariffs could potentially slash the prices of various agricultural products and discuss the long-term benefits of these tariffs on agricultural markets. He said that a significant need to find markets exists for American farmers. Corn makes up about 20% of any given year that the US exports to other countries, while soybean reaches up to as much as 50% of America’s production going to other markets. This creates an interesting dynamic that puts considerable pressure on the ongoing circumstances.
Carstens was of the view that the American farmers hopefully understand that the government is playing the long game here and working on something that would hopefully be significantly profitable for America in the long run. That translates to opportunities for farmers to get the most for commodities, something that they need to a great extent at the present. However, in the short term, we have to deal with these changes in the market.
In other words, Carstens said that the scenario could benefit consumers because the US is flooded with the said agricultural product. Since it is comparatively more expensive to export these products, American consumers get cheaper soybeans and corn, but the farmers potentially lose their export business. There is, thus, a balance that comes into play. The market will certainly see price decreases as export slows and supply increases. However, the farmers are dealing with prices that continue to escalate amid other costs.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 30 farmland and agriculture stocks and chose the top 14 most popular stocks among hedge funds. The list is ordered in ascending order of the number of hedge funds as of fiscal Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database.
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).
A close-up of freshly picked bananas in a basket, surrounded by a lush tropical forest.
Fresh Del Monte Produce (NYSE:FDP)
Number of Hedge Fund Holders: 18
Fresh Del Monte Produce (NYSE:FDP) produces and distributes fresh fruit and vegetable products. Its operations are divided into the following segments: Fresh and Value-added products, Bananas, and Other Products and Services. In addition to selling various kinds of fruits and vegetables, the Fresh and Value-added products segment also produces juices, prepared snacks and meals, and other beverages.
The company successfully shifted its operations from a net loss in 2023 to a $142.2 million net income in 2024. This shift was driven by focusing on high-margin items such as avocados and pineapples, strategic operational improvements, and disciplined cost management. Fresh Del Monte Produce (NYSE:FDP) also generated strong cash flow, reaching $129 million, along with a notable 39% reduction in long-term debt to $244 million.
One of the primary drivers of Fresh Del Monte Produce’s (NYSE:FDP) growth strategy is its focus on value-added products and specialty ingredients, which is boosting profitability. It recently signed a licensing agreement with The Nunes Company, further bolstering its product portfolio and positioning the company for long-term expansion. It ranks 14th on our list of the best farmland and agriculture stocks to buy now. Investors are bullish on the stock due to its strategic operations, and its median price target of $30.94 implies an upside of 22.83% from current levels.
Overall, FDP ranks 14th on our list of best farmland and agriculture stocks to buy now. While we acknowledge the potential of FDP, our conviction lies in the belief that 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 FDP 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 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.